How to Opt-Out of the Technocratic State
========================================
By Derrick Broze
Inspired by the work of Samuel E. Konkin III

Introduction
------------
As humanity enters the second decade of the 21st century, we find
ourselves at the precipice of a Technocratic Age where Artificial
Intelligence (AI), Smart Technology, and the Internet of Things are
becoming a part of everyday life. This technology provides benefits
but comes at a costacorporations, governments, law enforcement, and
hackers are all capable of peering into our lives at any moment.
Corporations and governments are even learning to use technology in a
way that allows them to be the "social engineers" of society. The
concept of social credit is also becoming increasingly popular, and
the likelihood that citizens will face negative consequences for
choosing to speak about controversial topics or criticizing
authorities is only going to increase.

This shift toward a world where digital technology is the solution for
all thing s is being driven by the tech sectoraspecifically the
institutions often referred to as Big Wireless and Big Tech. The CEOs
of transnational corporations and their partners in government have
worked to cement digital technology into every aspect of humanity. The
world they envision is one where scientists and technologists are the
elite class who decide the future of society. While the di gital
technology of these industries has only emerged in the last few
decades, the philosophy which guides many of the leading figures in
industry and government is nearly a century old.

This philosophy of a rule by technological experts and scientists is
known as Technocracy. As we will see in the coming chapters, the ideas
which underpin this school of thought have quietly been influencing
world leaders for decades.

Is this obscure political theory from the 20th century the guiding
force behind the move towards a digital dystopia? What are the
implications for a world that is always plugged in and on "the grid"?
How can one maintain privacy and liberty in a society that is based on
mass surveillance, technological control, and the loss of
individuality?

I believe the answers to these questions lie in the writings of
political philosopher Samuel Edward Konkin III. Konkin was an activist
during the 1960s when talk of revolution in America was at its peak.
He believed that using violence to overthrow the State would only
result in another leader stepping in and continuing the charade.
Konkin also rejected voting, seeing it as participating in an immoral
system as well as an inadequate strategy for achieving lasting change.
Rather than voting or violence, Konkin proposed a third path for the
freedom seeker which he termed Counter-Economics, and more
specifically, Agorism. We will explore his work in detail in the
coming chapters. Whether Konkin's vision of freeing the people from
the chains of the State becomes reality completely depends on the
consciousness of the people. After enough people have been educated
about the dangers of the Technocratic Era, there must also be an
understanding of the power of non-compliance. If a mass of people find
ways to avoid the digital corporate-state we can leverage our numbers
and the power of the counter-economy. We can create more freedom and
opportunity to live the lives of abundance we desire. The window is
short, but we have the opportunity to remove ourselves from the
State's matrix of control. The current social credit system employed
in China wi ll soon make its way to the United States and the rest of
the "civilized world." It has already become nearly impossible to live
a life that is not monitored and analyzed from cradle to grave. If we
plan to survive this quickly approaching technocratic corporate-state
control grid, I believe we must embrace the solutio ns first
identified by Samuel E. Konkin III. It's time to recognize that
Agorism an d Counter-Economics are the answer to our problems.

One final note: As I type these words in December 2019, I do so with
the full awareness that digital technology is evolving at an
exponential rate. The invasive technology of today might appear quaint
or even archaic to someone reading this in 2025. I will admit that
even the solutions contained within this book may end up outdated in
less than a decade depending on the direction our technological world
takes. However, no matter what the future looks like my message to you
is never surrender. Find ways to adapt. Build communities with other
like-minded people. Keep the flames of liberty alive in your heart and
minds. As long as the human spirit desires to be free, we can and will
find a way to overcome all hardship. No matter what year you discover
this book, please use it as inspirati on and a foundation upon which
to build. Humanity's future in in your hands.

- Derrick Broze, January 2020

Part 1: Technocracy, Counter-Economics, and the Future of Freedom
-----------------------------------------------------------------
The following chapters offer a brief introduction to several concepts
including Technocracy, Counter-Economics, and Agorism. In the interest
of getting to the "how to" aspect of this presentation we are only
going to give an overview of these ideas. For those who want to
understand the larger implications of the technocratic movement I
recommend author Patrick Wood. If you are interested in a more robust
understanding of Counter-Economics and Agorism, I recommend my own
book Manifesto of The Free Humans, as well as Samuel Konkin's books. I
also highly recommend reading Konkin's final unfinished book
Counter-Economics which is included in Part 3 of this work.

1. What is a Technocracy?
-------------------------
In the early 20th century, a movement began to develop around a
political theory known as Technocracy, a system where management of
governments is handled by technical experts, often involving
technology-focused solutions. The proponents of Technocracy claimed
the concept would lead to better management of resources and
protection of the planet. However, this system of governance by
technological experts and their technology would also involve a loss
of privacy, centralization, and management of all human behavior.
Although the term appears to have been largely forgotten, the
technocratic philosophy and influence can be seen everywhere in our
modern digital world. One of the most influential proponents of
Technocracy was a man named Howard Scott, a writer who founded the
Technical Alliance in New York City in 1919. Scott believed business
owners lacked the necessary skills and data to reform their industries
and thus control should be handed over to engineers. In 1932, Scott
and fellow technocrat Walter Rautenstrauch formed the "Committee on
Technocracy" at Columbia University. The group would eventually
splinter, with Scott leading Technocracy Incorporated and technocrat
Harold Loeb in charge of the Continental Committee on Technocracy.

In 1938, Technocracy Incorporated released a publication which
outlined their vision for a Technocracy (emphasis mine):

> Technocracy is the science of social engineering, the scientific
> operation of the entire social mechanism to produce and distribute
> goods and services to the entire population of this continent. For the
> first time in human history it will be done as a scientific,
> technical, engineering problem. There will be no place for Politics or
> Politicians, Finance or Financiers, Rackets or Racketeers. Technocracy
> states that this method of operating the social mechanism of the North
> American Continent is now mandatory because we have passed from a
> state of actual scarcity into the present status of potential
> abundance in which we are now held to an artificial scarcity forced
> upon us in order to continue a Price System which can distribute goods
> only by means of a medium of exchange.
> 
> Technocracy states that price and abundance are incompatible; the
> greater the abundance the smaller the price. In a real abundance there
> can be no price at all. Only by abandoning the interfering price
> control and substituting a scientific method of production and
> distribution can an abundance be achieved. Technocracy will distribute
> by means of a certificate of distribution available to every citizen
> from birth to death. The Technate will encompass the entire American
> Continent from Panama to the North Pole because the natural resources
> and the natural boundary of this area make it an independent,
> self-sustaining geographical unit.

Technocrats publicized their vision of a centrally planned world with
books, speeches, clubs, and political parties. This resulted in a
brief period of popularity in the U.S. and Canada in the years
following the Great Depression of 1929. As politicians and economists
searched for a solution to the financial calamity, the technocrats
imagined a world where politicians and business owners were replaced
with scientists, engineers, and other technical experts to manage the
economy.

However, in the 1940s mainstream interest in the Technocracy movement
seemed to dissipate. Some researchers attribute this to a lack of a
coherent political theory for achieving change, while others say
President Roosevelt and the New Deal provided an alternative solution
to financial hardship. Regardless, Technocracy ceased to be a topic of
mainstream political discourse even as the industrial revolution
spurred on new technologies and previously unseen wealth for those in
control of said technology.

The ideas that underpinned the technocratic vision received a notable
endorsement in 1970 when political scientist Zbigniew Brzezinski
released his book Between Two Ages: America's Role in the Technetronic
Era. Brzezinski will be familiar to long time researchers of the
ruling elite. Until his death in 2018, Brzezinski was a diplomat who
ran in the same circles as former Secretary of State and accused war
criminal Henry Kissinger and David Rockefeller. Brzezinski served as
advisor to several presidentsafrom Jimmy Carter to Barack Obama.
Brzezinski was also a member of the Atlantic Council, the National
Endowment for Democracy, and the Council on Foreign Relations.

Brzezinski's Between Two Ages may have changed the term from
"Technocracy" to "Technetronic," but the depiction of the future is
the same: a world in which the scientific and technological elite
centrally plan the lives of all humanity. Essentially, a
technologically advanced authoritarian-collectivism where individual
liberties are subordinate to the apparent needs of the collective.
Brezinski explains Technetronic in the following way: "The
post-industrial society is becoming a "technetronic" society: a
society tha t is shaped culturally, psychologically, socially, and
economically by the impact of technology and electronicsaparticularly
in the area of computers and communications. The industrial process is
no longer the principal determinant of social change, altering the
mores, the social structure, and the values of society.

In the Technetronic society scientific and technical knowledge, in
addition to enhancing production capabilities, quickly spills over to
affect almost all aspects of life directly. Accordingly, both the
growing capacity for the instant calculation of the most complex
interactions and the increasing availability of biochemical means of
human control augment the potential scope of consciously chosen
direction, and thereby also the pressures to direct, to choose, and to
change." Here are a few more choice quotes from Between Two Ages:
America's Role in the Technetronic Era which make it clear that the
goal is to build a global Technocracy:

> Another threat, less overt but no less basic, confronts liberal
> democracy. More directly linked to the impact of technology, it
> involves the gradual appearance of a more controlled and directed
> society. Such a society would be dominated by an elite whose claim to
> political power would rest on allegedly superior scientific knowhow.
> Unhindered by the restraints of traditional liberal values, this elite
> would not hesitate to achieve its political ends by using the latest
> modern techniques for influencing public behavior and keeping society
> under close surveillance and control. Under such circumstances, the
> scientific and technological momentum of the country would not be
> reversed but would actually feed on the situation it exploits.
>
> Persisting social crisis, the emergence of a charismatic personality,
> and the exploitation of mass media to obtain public confidence would
> be the steppingstones in the piecemeal transformation of the United
> States into a highly controlled society.

Today we are witnessing the emergence of transnational elites, but now
they are composed of international businessmen, scholars and public
officials. The ties of these new elites cut across national
boundaries, their perspectives are not confined by national
traditions, and their interests are more functional than national.
Increasingly, intellectual elites tend to think in terms of global
problems: the need to overcome backwardness, to eliminate poverty,
prevent overpopulation, to develop effective peace-keeping machinery.
The concern with ideology is yielding to preoccupation with ecology,
pollution, overpopulation and the control of disease, drugs, and
weather. There is a widespread consensus that functional planning is
desirable and that it is the only way to cope with various ecological
threats.

> The fiction of sovereignty is clearly no longer compatible with
> reality. The time has come for a common effort to shape a new
> framework for international politics. There is already widespread
> agreement on developing international peace-keeping forces. Emerging
> global consciousness is forcing the abandonment of preoccupations with
> national supremacy and accentuating global interdependence.

Brzezinski's vision of the future was not mere speculation or
guesswork. He was a member of the ruling class who spent his life
using nation states and the people within them as pawns in a chess
game in which most of the players are dangerously oblivious to the
reality unfolding around them. I believe Brzezinski's book describes
the world that is unfolding in the early 2020s. I highly recommend
diving deep into his work for other fascinating insights into where we
are and where we might be headed. Now that we understand a bit of
history of Technocracy and some of the ideas that it proposed we need
to examine the world of today to note the Technocratic (or
Technetronic if you prefer) influence.

Let's start by looking at the most wealthy companies and most
influential CEOs. These individuals are running companies which have
amassed large amounts of financial wealth as well as unfathomable
amounts of digital data on all of their customers. From Jeff Bezos at
Amazon, Bill Gates of Microsoft, Mark Zuckerberg at Facebook, Elon
Musk of Tesla, and lesser known names at Google, Apple, and others,
these are the technocrats of the early 2020s. Interestingly enough,
Musk appears to be walking a path similar to his grandfather, Joshua
Haldeman, who was a research director for the Technocracy Incorporated
of Canada and national chairman of the Social Credit Party. These men
and their colleagues in various technological industries wield immense
power through their companies, wealth, and cultural influence. These
individuals have enough money, resources, and connections to shape
elections, geoengineer the climate, and cause dips in the stock
market, to name a few examples. They are the technocrat class of
today. I want to remind the potential reader of the future that these
names might not mean anything to you at this point they may indeed be
relics of a long dead past. Whatever the names of the corporations,
CEOs, and governments filling this role the concerns and possible
solutions remain the same. If technology continues to advance
exponentially, then it is likely that the trend towards surveillance
will also continue and with the decrease in privacy, a decrease in
overall liberties.

This is what we seek to overcome.

Another example of the Technocratic world involves the growing use of
surveillance tools like facial recognition, voice detection, 24-7
closed-circuit TV cameras, Artificial Intelligence, algorithmic
manipulation, cell phone surveillance, social media monitoring,
location tracking, digital eavesdropping via smart devices, and the
overall push towards a Smart Grid powered by 5G. Of course, these
technologies are not promoted as surveillance tools but rather too ls
for safety, convenience, education, and profit. However, the result is
the same: individuals and companies promoting technological solutions
to the world's ills, resulting in a loss of individual freedoms and
more centralized control. Of course, selling society on the need for a
completely interconnected digital world where technologists and
scientific experts organize our lives can be helpe d along with a
healthy dose of propaganda from the State's favorite partner in crime,
the corporate media. Brzezinski's Between Two Ages provides more
insight into the Technocratic plan:

> In the Technetronic society the trend seems to be toward aggregating
> the individual support of millions of unorganized citizens, who are
> easily within the reach of magnetic and attractive personalities, and
> effectively exploiting t he latest communication techniques to
> manipulate emotion and control reason.

Together the technocrats (aka Big Tech), their obedient friends in
media, and their partners in government are becoming what I call the
Technocratic State. The rest of this work is dedicated to poking holes
in this Technocratic State and exploiting its weaknesses. As mentioned
in the introduction, those who want to maintain privacy and liberty
must be willing to adapt to constantly emerging technologies with the
potential to liberate or imprison our hearts and minds. I believe the
key to resisting the Technocracy can be found in the work of Samuel
Konkin III and his theory of Counter-Economics.

2. Counter-Economics and Agorism
--------------------------------
Note: Before we get to the "how to" of living a life outside the
confines of the increasingly omniscient Technocratic State, we must
understand the history and philosophy of Counter-Economics. This
chapter includes a run down of the counter-economic strategy,
including various definitions offered by Samuel Konkin III. The third
chapter further breaks down the philosophy of Agorism. Both chapters
were originally published in my third book, Manifesto of the Free
Humans, but have been updated to better reflect the specific nature of
this book.

I include them here as a brief introduction to the concepts of
Counter-Economics and Agorism. It is my hope that this distillation of
Samuel Konkin's work will help readers understand that these
strategies can be employed in your lifearegardless of age, race,
religion, ethnicity, gender, political affiliation, socioeconomic
status, or any other division of the human species. Quite simply,
Counter-Economics is a strategy that can be practiced by anyone
anywhere in the world. For readers who are new to this field of
research, I recommend checking out Konkin's New Libertarian Manifesto
and An Agorist Primer. For those who are familiar with
Counter-Economics and Agorism, I recommend skipping ahead to Chapter
4. In 1979, anarchist, activist, and writer Samuel E. Konkin III
(SEK3) released The New Libertarian Manifesto, presenting his case for
a strain of libertarianism that he called aNew Libertarianism.a The
philosophy behind the New Libertarian Movement was Agorism, named
after the aagora,a the Greek word for marketplace. We will elaborate
on Agorism in a moment, but essentially itis a radical philosophy that
seeks to create a society free of coercion and force by encouraging
people to opt-out of the corporate-state control grid. Konkin believed
if a movement of people pulled their money, time, and support from
corporate and state power, it would siphon away enough resources to
collapse the State. As the State collapsed the agorists would help
build systems that are not based on violence and coercion.

Konkin called on individuals to exit the mainstream economic system
because he was one of the first modern thinkers to recognize that the
unregulated market is the largest market in the world. Sometimes known
as system-d, alternative, or informal economy, the value of this
untaxed and unregulated market has a market value in the trillions of
dollars. Throughout history, when a government or king has tried to
enforce prohibition -be that drugs, alcohol, gambling, sex, or
books- they inadvertently cause a growth in the underground economy or,
as Konkin called it, the counter-economy. Upon recognizing that the
State has been incapable to slow the growth of the counter-economy
Konkin saw an opportunity to disempower the State and preserve liberty
for the people. Konkin termed this strategy "Counter-Economics," which
he defined as the "theory and practice of all human action neither
accepted by the State nor involving any initiatory violence or threat
of violence."

Throughout the years, Konkin continuously refined his
understanding and writing on the topic, and in doing so he offered
several definitions and background on Counter-Economics:

> An explanation of how people keep their wealth and property from the
> State is then Counter-Establishment economics, or Counter- Economics
> for short. The actual practice of human actions that evade, avoid and
> defy the State is countereconomic activity, but in the same sloppy way
> "economics" refers to both the science and what it studies, Counter-
> Economics will undoubtedly be used. Since this writing is
> Counter-Economic theory itself, what will be referred to as
> Counter-Economics is the practice.
> --The New Libertarian Manifesto

> A Counter-Economist is (1) anyone practicing a counter-economic act;
> (2) one who studies such acts. Counter-Economics is the (1) practice
> (2) study of counter-economic acts.
> --An Agorist Primer

> Counter-Economics is doing what you want, when you want, for your own
> good reasons.
> --Counter-Economics

> Counter-Economics sounds like counter-culture; indeed, the term was
> chosen with that in mind. Where the Counterculture rejected an
> Establishment "culture" and its values in the 1960s, the
> counter-economists reject the Establishment economics as just as
> corrupt. Much of the counterculture was counter-economic, much of it
> was not.
> 
> Anti-economics is not Counter-Economics; in fact, Counter-Economics as
> theory was developed from what could be called an orthodox revolt
> against an heretical, impure, Establishment economics.
> --Counter-Economics

I have always seen Counter-Economics as a method of aligning your
actions with your stated goals and principles. If you don't support
illegal wars of aggression, then find ways to avoid paying taxes or
donate your taxes to a charity (see: War Tax Resistance). If you're
tired of central banks manipulating the State's currency and enslaving
you via funny money, then avoid the State's money, use alternative
currency, barter, reduce your need for money, etc.

Counter-Economics suggests that moral people break bad laws by
choosing to consciously opt out of systems that do not align with
their values. As Konkin wrote in the unfinished Counter-Economics:

> Countereconomic activity is any human action that takes place without
> the approval of the State. And since laws cover almost every human
> endeavor, often prohibiting both the action and its corresponding
> inaction, everyone to at least some small degree must bend or break
> laws simply to exist.

Being a counter-economist means that when you run into a roadblock to
your liberty and health you find a way around it. This can include
using or creating alternative currencies, community gardening efforts
which provide an opportunity to be free of big corporate grocery
stores, tax resistance, operating a business without licenses so your
hard-earned money doesn't go to the State, and more. Counter-Economics
also extends to the creation of alternative education programs, free
schools or skill shares, and independent media ventures that counter
the establishment narratives.

The reality is that the counter-economy is all around you. Every time
someone pays a neighbor in cash to mow the lawn or do handiwork, they
are participating in the counter-economy. The transaction does not
involve taxes going to the State and the cash makes it a non-digital,
untraceable transaction. If you have ever shopped at a garage sale,
flea market, or pop up shop and not paid taxesaor perhaps even paid
with an alternative currencyayou have been a countereconomist. Of
course, most of the public who participate in the
counter/underground/alternative economy do not realize the potential
and likely have never heard of Konkin or Counter-Economics. He
believed a raising in the consciousness and awareness of the power of
the counter-economy could create a mass movement of people exiting the
system and building new ways outside of the Technocratic State.

For a deeper understanding of Konkin's work let's take a look at his
writing on Agorism. It is important to note that one need not
self-identify as a new libertarian, libertarian, agorist, or anarchist
to appreciate and make use of Counter-Economics. Simply put, one can
practice Counter-Economics for the benefits it offers in escaping the
Technocracy while not completely agreeing with Konkin's theories.
However, I share this research because I believe his ideas of fer a
viable path forward.

Understanding Agorism
---------------------
In the New Libertarian Manifesto, SEK3 outlines his vision for a more
free and just world by first describing society's present condition:
Statism. Statism is the tendency for citizens of a nation to view the
State as the mechanism for which change can be brought about. Thus, a
statist is someone who blindly trusts in the authority of the State
and always reaches to the State as the solution to society's ills.

Konkin briefly outlines the path of human thinking, from slavery to
the discovery of libertarian thought, and emphasizes the importance of
consistency between means and ends. Indeed, Konkin believes that
exposing Statist inconsistencies is athe most crucial activity of the
libertarian theorist.a From here, Konkin describes the goal of Agorism
and the counter-economic means necessary to achieve this goal.

In order to paint a clear picture of the agorist struggle for a more
free world, Konkin explains the four stages from Statism to Agorism as
well as various actions that a consciously practicing agorist might
seize upon in order to advance agorist propaganda and counter-economic
activity. By understanding Konkin's vision of progress it is possible
to create a diagram to outline how far society as a whole has come and
where we, as individuals, fit within these steps. After the steps have
been mapped it will be possible to pinpoint strategies that can help
the new libertarian move from one stage to the next.

Konkin begins in "Phase Zero: Zero-Density Agorist Society."

Phase Zero is the time when agorists did not exist and libertarian
thought was scattered and unorganized, which Konkin says has been
amost of human history.a Once libertarians became aware of the
philosophy of Agorism, counter-economic activity began and we moved
into aPhase 1: Low-Density Agorist Society.a In this phase, the first
counter-economic libertarians appear. Konkin believed that this was a
dangerous time for activists who would be tempted by aGet-LibertyQuic
ka schemes. Konkin also reminds agorists not to be tempted by
political campaigns. "All will fail if for no other reason than
Liberty grows individual by individual. Mass conversion is
impossible," he wrote.

Phase 1 is presented at a time where the main goal of the few
practicing counter economists is recruitment and creation of "radical
caucuses" or what I call Freedom Cells. Konkin also notes that the
majority of society is acting "with little understanding of any theory
but who are induced by material gain to evade, avoid, or defy the
State. Surely they are a hopeful potential?"

In order to achieve the free society Konkin again emphasizes the need
for education and "consciousness-raising of counter-economists to
libertarian understanding and mutual supportiveness." SEK3 also called
for the creation of a movement which may grow strong enough in
influence and numbers in the latter stages of Phase 1 to be able to
"block marginal actions by the State."

The ability to block actions by the State has absolutely increased in
recent years with the explosion of decentralized, peer-to-peer
networks via the Internet that allow for rapid sharing of information
and calls to organize. There is a growing number of videos on the
Internet showing communities banding together to oppose unjust arrests
by agents of the State.

For example, the websites and apps FreedomCells.org, NextDoor.com, and
GetCell411.com offer tools that can be used to strengthen our
communities, grow the counter-economy, and push back against the
State. By using the Freedom Cell Network, one can locate other
freedom-minded individuals within their city, state, or country with
the specific goal of organizing in the real world and bypassing the
need for government.

In 2016, we launched FreedomCells.org as an online platform for
building mutual aid groups known as Freedom Cells which we will
explore in detail in the next chapter. NextDoor also allows the user
to connect with the local community, both digitally and in the real
world. The app has the added benefit of being focused on a specific
neighborhood. This allows individuals to post important safety
information, lost and found items, or counter-economic business
opportunities directly to those who live near them. Finally, Cell411
describes itself as a areal time, free emergency management platform.a
This means it allows you to create acellsa or groups to which you can
send out direct alerts in the case of a flat tire, car accident,
violence from an agent of the State, or some other emergency. The app
also allows for truly agorist ridesharing where a third party does not
dictate the price of the trip or the currency that must be used. Note:
Once again, to the potential reader of the future, if these apps and
websites have been made irrelevant due to time and technological
advances, it is important to ensure we as free people have
alternatives to the State and corporations.

Each of these tools are a part of the technology of the
counter-economy which have the potential to render government
intervention and regulation completely useless. If we seize the moment
we can grow the black and grey markets using these emerging
peer-to-peer platforms. This is exactly what Konkin believed would
help society progress from Phase 1 to Phase 2.

As we move to "Phase 2: Mid-Density, Small Condensation Agorist
Society," the statists take notice of Agorism. Is it in this phase
that Konkin believes the counter-economy will grow and agorists will
begin to represent "an ever-larger agorist sub-society embedded in the
statist society." Although the majority of agorists are still living
within the Stateas claimed territories we begin to see a "spectrum of
the degree of agorism in most individuals." This includes benefactors
of the State who are "highly statist" and "a few fully conscious of
the agorist alternative," however the majority of society is still
engaged in the Statist Economy.

From here, Konkin suggests that agorists may want to start condensing
into districts, ghettos, islands, or space colonies. We are in fact
beginning to see the creation of agorist minded communities,
seasteaders, eco-villages, co-ops, and underground spaces which
emphasize counter-economic activity and the creation of
counter-institutions to the State. Konkin believed these agorist
communities might be able to count on the sympathy of mainstream
society to prevent an attack from the State.

This is the moment where the question of community protection and
defense comes into play. We have seen the creation of community
protection alternatives to the police state monopoly (see the Threat
Management Center in Detroit and the Autodefensas in Mexico), but thus
far nothing completely agorist has come into existence. It is the
creation of these syndicates of community protection which will
ultimately allow the agora to flourish. However, for this to happen
athe entire society has been contaminated by agorism to a degree,a
leading to the possible creation of an above or underground movement
which Konkin called the New Libertarian Alliance (NLA). The NLA simply
acts as the spokesperson for the agora and uses aevery chance to
publicize the superiority of agorist living to statist inhabiting and
perhaps argue for tolerance of those with "different ways".

This brings us to "Phase 3: High-Density, Large Condensation, Agorist
Society," which is described as the point when the State has moved
into a terminal crisis period due in part to athe sapping of the
Stateas resources and corrosion of its authority by the growth of the
Counter-Economy.a As the agora grows in influence the Stateas
stranglehold also dissipates because of unsustainable economic
practices. Konkin again warns that the statists will attempt to win
over new libertarians with "anti-principles" and calls for maintaining
avigilance and purity of thought." Highly motivated new libertarians
move into R&D to help create the first agorist protection and
arbitration agencies that will compete with the State. At this point,
government exists in pockets with the State mostly concentrated in one
geographic territory. Those living under statism are very aware of the
freedom being experienced by their agorist counterparts. The State has
become weak enough that "large syndicates of market protection
agencies" can contain the State and defend new libertarians who sign
up for protectioninsu rance. This, Konkin believed, was "the final
step before the achievement of a libertarian society." Society is
divided between the larger agorist areas and the isolated statist
centers.

The transition from Phase 3 to Phase 4 brings about "the last
unleashing of violence by the ruling class of the state." Konkin said
that once the State's intellectuals recognize that their authority is
no longer respected, they will choose to attack. Defense against the
State will be managed after the counter-economy has generated the
syndicates of protection agencies large enough to defend against the
remaining statists. The NLA should work to prevent the State from
recognizing its weaknesses until the agorist movement has completely
infected the statist society. Once the agorist communities have
successfully resisted the State's attack, the agorist revolution will
be complete. As we move from Phase 3 to 4, Konkin notes that the first
three changes "are actually rather artificial divisions; no abrupt
change occurs from first to second to third." However, he envisions
the change from the third to the fourth phases to be "quite sudden."

In Phase 4, "Agorist Society with Statist Impurities", the State has
gasped its dying breath and the counter-economy becomes the freed
market where exchanges are free of coercion. Konkin predicts that
"division of labor and self respect of each
worker-capitalist-entrepreneur will probably eliminate the traditional
business organization, especially the corporate hierarchy, an imitation
of the State and not the Market." He imagines companies as
associations of independent contractors, consultants, and
entrepreneurs. After the remnants of the State are apprehended and
brought to justice, freedom becomes the basis of ordinary life and "we
tackle the other problems facing mankind."

Whether the totality of Konkin's vision becomes realized, the world
has at the very least made some slight progress through the phases
predicted in the New Libertarian Manifesto. All signs point to the
counter-economy and consciously practicing agorist movement to be
somewhere at the tail end of Phase 1 and merging into Phase 2. As
mentioned above, the Internet (and technology as a whole) has greatly
increased the chances for success of the Konkian revolution. While
humanity is being exposed to the value of a life free of coercion,
they have not yet been properly exposed to the tools with which to
create such a world. If the agorist movement and counter-economy
continue to expand in equal rates to the violence and theft of the
State, it will only be a matter of time before we see protection
agencies with the capacity to defend the people. Konkin believed that
once the people recognize the State is weakened and in decline, they
will naturally gravitate towards the counter-economy, leading his
agorist vision to become reality.

Clearly the people of the world have a desire to exchange their goods
and services without oppressive, elitist barriers to entry in the
marketplace. The people desire to voluntarily associate and exchange
without interference or intervention. This desire will always lead to
the creation of counter-economic activity in the black and grey
markets as long as the "mainstream" statist economy is subject to the
whims of the current puppets in control. However, seeking to escape
the State's regulation is not the only goal to our agorist and
counter-economic strategy. The endgame is a stateless society where
free people are not bound by the force and coercion of the parasitic
state and corporate class.

Though it is rarely discussed in public schools or the mainstream
media, there are several examples of stateless societies and
communities existing throughout history. For those interested in
studying past stateless societies, I recommend studying James Scott's
The Art of Not Being Governed: An Anarchist History of Upland
Southeast Asia; A Century of Anarchy: Neutral Moresnet Through the
Revisionist Lens; and Pierre Clastres" Society Against the State.

3. Vertical and Horizontal Agorism
----------------------------------
> As more people reject the State's mystifications, nationalism,
> pseudo-economics, false threats, and betrayed political promises, the
> Counter-Economy grows both vertically and horizontally. Horizontally,
> it involves more and more people who turn more and more of their
> activities toward the counter-economic; vertically, it means new
> structures (businesses and services) grow specifically to serve the
> Counter- Economy (safe communication links, arbitrators, insurance for
> specifically "illegal" activities, early forms of protection
> technology, and even guards and protectors). Eventually, the
> "underground" breaks into the overground where most people are
> agorists, few are statists, and the nearest State enforcement cannot
> effectively crush them.
> - SEK III, Applied Agorism, An Agorist Primer

We are going to take a look at two different types of counter-economic
action that are applicable to a variety of individuals in a range of
living situations. I refer to these strategies as Vertical and
Horizontal Agorism. We are working with two complementary definitions
of horizontal and vertical that further explain the "how to" of
agorist philosophy. These definitions are taken from the above quote
from Samuel Konkin III and from Swedish Austrian economist Per Bylund
and his 2006 essay A Strategy for Forcing the State Back. Let's
compare the definitions and see how they can provide a path for the
curious countereconomist.

Konkin starts by describing the counter-economy as growing
horizontally in the sense of an increasing portion of the mainstream
population turning their activities towards the non-statist economy.
Vertical growth, in the Konkian sense, involves the actual creation of
counter-institutions to the statist counterparts. This means building
alternatives not only to the economic power centers via alternative
currencies but alternatives to the deadstream corporate media, the
corporate food production systems, the compliant academic centers, and
the growing non-profit industrial complex.

Per Bylund describes his vision of vertical Agorism as the "introvert"
strategy based on the work and ideas of radical libertarian Karl Hess.
Hess was an extremely eloquent speaker and speechwriter who grew from
conservative to libertarian anarchist to a more left-leaning community
organizer and activist. During the 1960s, he was heavily involved in
organizing on campus during the rise of the new left and anti-war
student movements. Hess worked with Murray Rothbard, Konkin, Carl
Ogelsby of the Students for a Democratic Society, and several others
in an attempt to forge alliances between the emerging new left and
libertarian movements. He was also one of the few people to have 100
percent of his wages stolen by the IRS for challenging the income tax.

In the 1970s, Hess shifted the focus of his activism to experiment in
community building within the low income neighborhood of Adams-Morgan
in Washington D.C. In his books Community Technology and Neighborhood
Power Hess outlines how he worked with the local neighborhood to build
an empowered community focused on sustainability, or what they termed
"appropriate technology." Hess describes a neighborhood with aquaponic
gardening in basements, rooftop gardens, and community services meant
to replace the State options. He was adamant that tools and technology
directly contribute to freedom. By being able to share tools with your
community members you can share access to the means of production and
encourage entrepreneurship.

It is this focus on community empowerment that Per Bylund refers to as
the vertical or introvert strategy. These actions can be considered
agorist in the sense that they are aimed at building self and
community reliance rather than dependence on external forces, but they
are not explicitly counter-economic because they do not involve black
and grey markets. Still, these vertical actions are extremely valuable
and necessary.

Vertical Agorism includes participating in and creating community
exchange networks, urban farming, backyard gardening, farmers markets,
supporting alternatives to the police, and supporting peer-to-peer
decentralized technologies.

While these vertical steps could potentially involve the use of the
State's currency (and therefore not completely counter-economic), they
are still significant for challenging the dependency on the State and
corporate classes.

Other vertical steps may not directly involve exchanging currency but
still work against dependency. This could include both moral support
and promotion of technologies that disrupt the status quo and foster
stronger relationships among community members.

One very pronounced example of vertical Agorism is seen in the growing
alternative media which has been made possible by the Internet. Less
than one generation ago, the mainstream media, owned by
mega-corporations and tightly regulated by government, controlled all
of the information that filtered down to society. The distribution of
information in society came from the top down making it very easy to
brainwash and propagandize the population. However, with the rise of
the Internet activists and freedom-seeking individuals discovered they
could use this new medium to create their own media, become
journalists themselves, and fight back against the propaganda of the
State. In just a few short years, the alternative media quickly upset
the monopoly of the mainstream media, taking up large portions of
their once exclusive market share. The surge of independent media
provides an excellent example in our study of how alternative systems
and institutions can be created to compete with existing State
monopolies. (Unfortunately, the Corporate-State nexus has permeated
social media as well and censorship of independent voices is now
pervasive as of 2019.)

The goal is to question and challenge the mechanisms of power that
seek to influence and rule over our lives. This includes the State as
well as other institutions that attempt to exert control and
influence. For example, by choosing to grow your own food or support
local farmers, you are taking a vertical step away from the
biotechnology corporations that promote the heavy use of pesticides
and a potentially hazardous technology. You are also not supporting
the transportation of food products from thousands of miles away.
Instead, you walk to your backyard or the local market for your
produce. This greatly increases your independence while terminating
support for an unsustainable industry. These vertical steps are also
the easiest ways to begin living in line with your principles. Once
again, we can see the value of consistency of words and actions.

Per Bylund describes the horizontal, or extrovert strategy, as more
directly related to Konkin's ideas. The extrovert label is related to
the bold choice to pursue actions the State considers to be illegal or
immoral. By venturing into t his territory you are joining the ranks
of the bootlegger, the moonshiner, the canna bis dealer, the guerrilla
gardener, the weapons dealer, the crypto-anarchist, and the unlicensed
lawn mower, food vendor, or barber. When one combines the vertical and
horizontal agorist strategy an image comes into view that illustrates
the steps a wide range of people can take in a variety of living
situations and environments.

In the bottom left corner we have Statism and in the top right corner
we have Agorism. We can plot vertical actions that help lift the
individual up from dependency. Perhaps your situation is better suited
to vertical actions such as growing your own food, using encrypted
messaging, hosting community skill shares at your house, practicing
peaceful parenting tactics, providing alternatives to State welfare by
crowdfunding money for community projects and feeding the homeless, or
simply cleaning up the neighborhood. Each of these steps moves the
individual (and in the long-term, the community) vertically towards
consistency and independence. For those who are ready to become
counter-economists and take on the risks of grey and black market
activity we plot their actions both vertically and horizontally. An
agorist practicing horizontally and vertically would move up and away
from Statism and dependency to the top right position of Agorism. This
means that for every garden built, alternative currency used, tax
avoided, skill shared, business practiced without a license, and
illegal substance sold the individual can plot their progress moving
from dependency to selfreliance and from Statism to Agorism.

When Konkin first espoused the concept of Agorism the consciously
practicing counter-economy may have only involved a few radical
libertarians. But since that time the opportunities for black and grey
market exchanges have grown immensely. As the State's weaknesses
become apparent it will become safer for the masses to begin exiting
the former economy and joining the countereconomy. T his is the truly
freed market or agora of which Konkin spoke.

Remember we cannot defeat the Technocratic State by using their
technology blindly as this will only serve to empower them. We must
create and support alternatives to the State's monopolies whenever and
wherever possible. It will take brave counter-economists venturing
into uncharted territories, making mistakes, occasionally falling
victim to the State's laws, and learning how to better our approach.
We need these pioneers to lay the groundwork so that others will not
have to face the same difficulties in the future. As these trail
blazers light the way. we also expect to see a growth of free
communities and freedom networks around the world.

I have a vision of thousands of interlocking autonomous communities
comprised of empowered individuals with a variety of unique ideas and
expressions of the human experience. These communities are voluntarily
trading and sharing skills without the violence inherent to our
current paradigm and without the constant invasions of privacy. I
believe this world can be achieved with an organized effort to spread
agorist philosophy and increase participation in the countereco nomy
via Vertical and Horizontal Agorism and the concept of Freedom Cells
which we will cover in Part 2.

4. The Drawbacks (And Solutions) to Living the Counter-Economic Lifestyle
-------------------------------------------------------------------------
The reasons one chooses to opt-out of "traditional" institutions and
societal expectations vary from person to person, but generally people
are looking to stop supporting systems they do not agree with. Whether
we are talking financially (to avoid taxation) or philosophically (on
moral grounds), many of us who live outside of the mainstream system
do so because we disagree with the people running these systems, and
in some cases, the system altogether.

We do not want to fund these governments by complying with taxation.
We do not want to support the monopolized banking system and the banks
that rob the people. We do not want to violate our moral compass or
principles by participating in these charades. Instead, we take steps
to begin removing ourselves from these systems as quickly (and safely)
as possible. We each have a different goal and different perspectives
on how far to push the effort to opt-out and vacate these systems that
promote authoritarianism and financial theft. However, what unites us
is our belief that people should be free to organize their own affairs
without the interference of centralized authority in the form of
government or monarchs. Put simply, we acknowledge that every
individual owns themselves and should be able to live free of
interference, extortion, threats of violence, and forced compassion.

When I came to these conclusions, I had an internal shift that was so
profound and simple: I will no longer participate in systems I do not
support. First, I stopped using banks because I saw the results of the
2008 financial crisis and I learned about the many economic crises
created by banksters throughout history. Second, I refused to use a
credit card and never attempted to establish a credit line through
these banks. I also stopped driving because I didn't want to get a
State ID and instead only use a passport. By the end of 2010, I came
to understand the nature of war and violence being perpetuated by the
American Empire and decided I would no longer pay an income tax. I
stopped filing and have made efforts to keep my income below the
Poverty Line. I also stopped working jobs which compenstated me in the
form of a check.

Since that time I have started a couple of businesses of my own
(without filing paperwork for city licenses) and only accepted cash,
silver, or cryptocurrency. All of my income has been in metals, cash,
digital payments, or bartering. Obviously, I am still paying a sales
tax when I am not shopping at a farmers market or buying directly from
a gray market entrepreneur, but the goal is to take steps towards
completely opting-out. It doesn't happen overnight and it doesn't come
without struggle. Let's take a moment to look at some of these
struggles and their potential solutions.

First, what are the potential downsides to not using a bank? Before we
answer that question we should note that there are alternatives to the
big banks, including local credit unions and co-ops. These
institutions are typically more connected to the local community and
not involved in economic theft. However, do your research and use
these alternatives at your own risk. One criticism of going ban kfree
is a fear of lack of security when not storing funds in a traditional
banking institution. The fact is, you can put your trust in a banking
institution and the U.S. government, or you can choose to take
personal responsibility and store your money under the mattress, in a
safe, in a private bank, or anywhere else you please so as long as you
are taking proper security measures.

Beyond the security risks, there are also financial downsides to not
using banks. I recently received payment in the form of a check for a
media gig. Not only was I forced to visit a bank to cash the check
(Bank of America, no less), but I was taxed $8 by the bank to cash my
check for not opening a bank account. Now, this problem is easily
remedied by ongoing education about the value of not using banks (or
government backed money) and the power of alternative currencies.
Unfortunately, we are still at a point where too few people know and
understand these values, resulting in limited options in the market.
The company that sent me the check is an old media company whose
employees are ignorant to agorist philosophy, Counter-Economics, and
digital payment options. The likelihood of my convincing them to pay
me in silver or crypto is not high. This is important to remember
because until we have built a completely parallel system that offers
an alternative to the current paradigm--in every area of our
lives--we will occasionally have to conduct business with people who
are still filing taxes and therefore keep a record of every financial
transaction.

Another recent issue I have encountered involves the renting or
purchasing of property. In my case, I was attempting to rent an
apartment in a big city, but these obstacles apply elsewhere as well.
Because I have rented through different people for years, it has
become increasingly difficult to do so on my own as I have less and
less records to show to potential landlords or Realtors. In the most
recent case I found several potential properties, contacted the
property owners, and attempted to negotiate my way into a new home. I
have no problem paying rent on time, but my lack of check stubs causes
issues with individuals looking for traditional forms of payment.

Again, when I attempt to explain that I receive money from supporters
via Patreon, money via this crazy thing called cryptocurrency, and
some money in cash, they usually look at me with a confused expression
on their face. I explain that I can show them payments received via
Paypal but that does not seem to satisfy either. From there, property
owners tend to ask to see a bank statement. When I say no, they are
baffled and then ask for a tax record. When I tell them I don't have
that either, they look at me as though I have personally disrespected
their mother. By the end of these conversations I am being told they
cannot rent to me because I have no way to verify my income.

So what is the solution to these problems? The most obvious solution
is education. Those of us who value the idea that all moral people
should opt-out of immoral systems and create new ones, ought to spend
our time and energy educating others about the value of such actions.
The more people who understand this concept, the more entrepreneurs
there are opting-out and creatin g value in the counter-economy. Now
as far as the banking situation, cryptocurrencies are showing the
world what digital decentralized banking looks like. The more energy
we put into supporting (or creating) alternative currencies--digital
or otherwise--the less power the centralized banking monopolies have.

As far as solutions for renting an apartment when you live mostly
outside of the system, I believe blockchain technology offers hope.
Blockchain is the peer-tope er, digital ledger technology behind
Bitcoin and other cryptos. To understand how blockchain can help, we
have to think about why Realtors and property owners want to see
documentation from a bank or a government. Trust. Security. Due to the
massive amount of propaganda promoted in public schooling, most people
grow up believing these institutions to be an essential part of life,
if not a benevolent force in our lives. We are taught to trust and
cooperate with these institutions. The average person does not trust
or believe someone is authentic or valuable or rent-worthy if they do
not possess such documentation. So imagine if every week when I am
paid for the articles I write, I take a screenshot of the digital
payment (or a picture of someone paying me cash for a job well done)
and post it on a blockchain. The blockchain is decentralized, meaning
posts cannot be altered or deleted. If I continue to post my weekly
income statements on a blockchain, I would have a decentralized and
transparent record of my history or any other documents I chose to
place on the blockchain. In fact, this could already happen by making
posts on a website like Steemit. If the Realtor or property owner
understands blockchain or is willing to learn, the y can feel secure
because there is a record of my pay. We could even sign a contract
together on the blockchain. This would allow for transparency and
security on both sides.

I believe solutions like this are the future and we are starting to
see this unf old. For the moment there are difficulties as we agorist
pioneers lay the groundwork for the counter-economy and the next stage
of human evolution. Do your part to create the future by educating
yourself and others about Agorism and CounterEcon omics.

(This essay was originally published in the Counter-Markets
Newsletter)

Part 2: Counter-Economics as a Solution to Technocracy
------------------------------------------------------
The following essays are my original writing combined with SEK3's
notes for his final unwritten chapters. I chose not to finish all of
his unfinished chapters and instead focused on the areas which I feel
have the most potential to educate the reader about counter-economics.
I am indebted to SEK3 for his notes and inspiration.

5. Counter-Economics In the Digital Age
---------------------------------------
Up to this point we have shared the history of Technocracy, the
strategy of Counter-Economics, and Agorism. We also explored how the
counter-economic path has the potential to be the solution to our
digital dystopia. Now we will discuss the solutions to living a life
as free from the grip of the Technocratic State as possible.

In addition to being an anarchist philosopher, Konkin was also a fan
of science fiction. These two interests merged with his "discovery" of
Counter-Economics, for it was his appreciation of the sci-fi genre
which lead him to propose that technology could play a role in freeing
the people from the chains of bondage and expand the counter-economy.
Konkin died in 2004, shortly before social media, cryptocurrency, and
digital encryption became mainstream. Long before bitcoin or
cryptocurrency emerged, Konkin was discussing similar concepts and
predicting that new computer technology would facilitate
counter-economic activity. However, Konkin was not a fool. He realized
that the authorities would use the emerging digital technology to
expand state control.

As someone who has spent the last seven years promoting Konkin's
ideas, I recognize that the Technocratic State threatens to remove the
ability to safely opt out of the corporate-state system. We are in
desperate need for solutions to maintain the anonymity and privacy
needed to safely navigate the countereconomy under the digital
dystopian world we are now living in. It is not clear if Konkin could
see the direction in which the world was headed when he left this
planet, but I have found myself contemplating this issue. Which brings
us to the following conversation.

What does it mean to be a counter-economist in the Age of the
Surveillance State? How can one participate in the underground economy
when Big Brother is always watching? Will it be possible to starve the
State once social credit scores become mandatory?

Let's start by examining the current landscape of the world concerning
digital surveillance and overall privacy. As of 2020 the majority of
the "developed" world has adopted the use of some type of digital
technology including cell phones, tablets, laptops, desktops, or
wearable digital tech. The middle class and higher are falling in line
with the latest fad of smart everything, surrounding themselves with
technology that can listen, record, and/or watch their daily lives.

From door bell cameras to home assistants and TVs that are always
listening, the masses are voluntarily abandoning privacy in the name
of entertainment and convenience.

Simultaneously, law enforcement and government agencies continue to
claim they need all manner of high tech gadgets to prevent terrorism
and violent crime. Cell phone surveillance tools, license plate
cameras, facial recognition cameras, radars that can see through
walls, secret surveillance planes, social media monitoring, DNA
collection, gait detection, voice detection, and threat scores--these
tools are increasingly available to departments willing to pay up.
There are also semi-private mega corporations buying up every bit of
data they can find on potential consumers. This data is used to sell
us things we don't need, monitor our daily habits, and will eventually
pressure every individual to be obedient to the Technocratic State
under threat of punishment and exclusion from the digital world.

In 2019, consumer tech organization Comparitech found that the United
States, China, Malaysia, Pakistan, India, Indonesia, Phillipines, and
Taiwan were the worst offenders when it came to protecting the privacy
of people's biometric data. Comparitech said that these nations use
biometric data to a "severe and invasive extent." Indeed, the
Technocracy is a growing problem around the world.

In the U.S., the Federal Bureau of Investigations (FBI) has been
fighting for years to keep secret a database containing hundreds of
millions of "face prints" from American citizens and non-citizens
alike. It is important to note that facial recognition technology is
not just about scanning someone's face. Newer software is also
learning to evaluate (and predict) your emotions and state of mind.
The FBI has also been waging a war against encryption, fearfing that
the people might develop an unbreakable code and thus maintain some
level of privacy.

The U.S. Transportation Safety Agency (TSA) has begun testing facial
recognition technology at select airports for international travelers
with plans to expand the program in 2021 and 2023. The U.S. government
has expressed interest in expanding the program to all travelers. The
plans for this type of biometric control grid in the U.S. were set
into motion by the Illegal Immigration Reform and Immigrant
Responsibility Act of 1996 and expanded after the attacks of September
11, 2001. However, there has been some successful push back against
the Technocracy. As of December 2019, three different U.S. cities have
banned or regulated facial recognition software pending further study.
In November 2019, France became the first European country to use
facial recognition technology as part of a nationwide digital identity
for citizens. The new government app is operated by using facial
recognition and will give users access to around 500 government
websites. Those who choose not to participate would theoretically be
locked out of accessing these government websites. Citizens of India
are already finding themselves locked out of the Aadhaar biometric ID
program. Under this system reports have begun to emerge detailing
instances of citizens being refused access to services due to Aadhaar
glitches and ultimately dying of starvation as a result. The program
launched in 2009 with the goal of giving every single Indian citizens
a unique, biometrically verified identification number. By the end of
2019, an estimated 1.2 billion Indians were enrolled in the program.
Users have their iris and/or finger prints scanned and then receive a
unique 12-digit number linked to their biometric and demographic data.
They will then use this identification number when getting married,
setting up a bank account, paying taxes, signing up for a cell phone
contract, or even when starting a digital wallet. Again, it appears
obvious that those who find a way to avoid the system will be locked
out of mainstream society.

China is perhaps the best current example of an advanced authoritarian
Technocratic State and likely the model for the rest of the world.
Another 2019 study from Comparitech reported that eight of the top ten
most-surveilled cities in the world can be found in China. By 2022
China is projected to have one public closed-circuit television (CCTV)
camera for every two people. The estimated 200 million CCTV cameras
are part of a "Skynet" network active across China. The Chinese
government has also started collecting citizen's DNA to build a DNA
database. The government has come under fire for detention centers
built for Uyghurs, a Muslim minority population which has been forced
to install a spyware app on their phones and submit to biometric
recognition. However, the Chinese government claims that the detention
centers are voluntary vocational training centers. In December 2019,
the Chinese government implemented a new rule requiring China's 854
million Internet users to use facial identification in order to apply
for new Internet or mobile services.

Equally disturbing is the ongoing rollout of the nationwide social
credit system. Starting in 2009, the Chinese government began testing
a national reputation system based on a citizen's economic and social
reputation or "social credit." This social credit score can be used to
reward or punish certain behaviors. By late 2019 Chinese citizens were
losing points on their score for dishonest and fraudulent financial
behavior, playing loud music, eating on public transportation,
jaywalking, running red lights, failing to appear at doctor
appointments, missing job interviews or hotel reservation without
canceling, and incorrectly sorting waste. To raise one's social credit
score a Chinese citizen can donate blood, donate to an approved
charity, volunteer for community service, and other activities
approved by the government. The Chinese government has begun to deny
millions of people the ability to purchase plane and high-speed rail
tickets due to low social credit scores and being labeled
"untrustworthy." This is the world of the early 21st century. If we
assume technology will contin ue to advance exponentially then it is
probably a safe bet that the surveillance an d privacy concerns are
here to stay. Unless there is some sort of resistance to th ese
dangers privacy will be completely eroded within a decade. For the
moment these technologies are mostly voluntary. For example you don't
have to buy the latest digital home assistant device and you don't
have to carry a cell phone wi th you everywhere you go. This means you
have the power to decide what type of products and companies you
support with your purchases and how you interact with technology. We
don't have to blindly submit and opt-in to every latest tech update or
advancement. The more immediate and threatening element of the
Technocracy is the State. While corporations are gathering massive
amounts of data from individuals who have chosen to purchase or use
certain products, the government is able to leverage their perceived
legitimate authority to force the populations to submit to biometric
technology. History is rife with examples of masses of people being
propagandized to work against their own interests. While the
collective population may be easily swayed, there will always be
individuals who hold out.

We as individuals can choose to opt out of mandatory biometrics and
social credit schemes. But if everyone around us is still opting-in it
is likely they will choose not to associate with those who have a low
social credit scores. Some people will do this out of fear that their
own score will decrease for hanging out with "untrustworthy" types. I
can hear it now: "You know I love you, man, but if my score drops any
lower I won't be able to take the family out of the country for
vacation." Or "I won't be able to get that loan, buy that car, or
visit public parks" the list goes on. This is the real power of social
engineering.

As we outlined above the Technocratic State is growing around the
world. This means at some point in the near future YOU will have to
make a choice. Will you submit to mandatory facial recognition in
order to travel? Will you submit to biometrics in exchange for
continued access to government services? What will you do when the
5G Smart Grid is everywhere from big city to countryside? Will you
give your car insurance company access to your location for a
discounted rate? Are you already using your fingerprints or your
face to unlock your cell phone or your home?

The answer to these questions will determine your future. I am
operating under the assumption that if you found your way to this book
you are at the very least curious about what it takes to live a
thriving life that is not under the thumb of the Technocratic State.
If that is your goal then you have a few options:

1. Hold Down the Fort - This option is for the person that has no
interest or ability to leave home for some other (potentially better)
option. If you are committed to your home or have no other option then
this would be you. You can either waste away and march with the rest
of the sheep to the slaughter or you can try to create change. Find
ways to reach others and educate them about the dangers. This might
involve fighting for political change on the local level, passing out
flyers, phone banking, or social media campaigns. I understand we
cannot all be full-time activists, but each of us can find a way to
contribute to the goal of creating a community of people who
voluntarily choose to opt-out of the Technocratic State. Of course,
the closer you are to a big city and "civilization" the harder it will
be to avoid the growing Technocracy.

2. Exit and Build - This involves leaving your base of operations
behind and moving to a location with less invasive practices and less
technocratic corporat estate influence. If you have decided you are
living in an area that has no hope and would rather start fresh then
you should exit and build something that reflects your values. This
could be done solo, as a couple, with family, and even with friends.
Perhaps you purchase land, share living space, or live adjacent to
each other in a neighborhood. No matter what the living situation the
intention here is to build a community that would provide some level
of safety and privacy for those who opt out of the mainstream
technocratic world. I want to stress that th is option is not
necessarily about bailing on your home. As I will outline in the
chapter on the Counter-Economic Underground Railroad, choosing to exit
and build before the shit hits the fan might help your close friends
and family down the line when it really matters. More on that later.

3. Apathy is Death - Of course, you are always free to do nothing.
Perhaps you see what's on the horizon and decide that A) it's too late
to stop the Technocracy, B) it's too much work to make an effort, or
C) you are just trying to take care of your own family and live a
peaceful life. I could go on, but you likely get the point. It's your
life and you are not obligated to take any action upon learning of the
Technocracy and the digital dystopia being built. However, I would
warn that apathy today will only make life more difficult for the
generations of the future. If we want to preserve and expand liberty
and privacy for all people we are going to have to take action in
realistic and tangible ways.

Of course we could brainstorm a dozen more options, but generally I
believe all plans can be sorted into one of these three categories.
For those choosing Option 1 it is important to understand that
deciding to stay put while attempting to op tout of the Technocracy
will involve breaking the law at some point. As the State continues
the push for mandatory biometrics (retina, fingerprint, and face
scanning) and social credit systems are adopted widely, it will become
increasingly difficult to operate your life without directly violating
the Technocratic State's orders. The trick is to determine the
potential risk vs the potential benefit.

As Konkin once wrote, "trade risk for profit." With the understanding
that every decision we make is economic (whether it relates to money
or not), Konkin recognized that choosing to violate the commands of
the State was a risk that could result in a profit in the form of an
increase in liberty in one form or another. So when you choose not to
report all of your income on your taxes in order to save money for
your family you are trading a risk for a benefit. In a similar way if
or when the State issues mandatory vaccination orders, mandatory
retina scanning, mandatory micro chipping, or any other mandatory
program you will have a choice. You can submit to these programs out
of fear of punishment or damage to reputation, or you can consciously
choose to opt-out of thes e systems. There will be risks and there
will be benefits. It is up to you to decide what is best for you and
your family.

In his unfinished book Counter-Economics Samuel Konkin described what
he calls Low-Profile and High-Profile Counter-Economics, two different
tactics available to those who seek to opt-out of invasive systems.
While Low-Profile Counter-Economics involves discreetly opting-out of
the Technocracy, HighProfile is more in your face.

> High-Profile Counter-Economics deals with a particular area of State
> coercion by calling attention to his or her victimization. The more
> noise, the better. The famed Chicago 8 used publicity to keep
> themselves out of prison for years, even after their convictions.
> 
> Civil disobedients trust public pressure to keep them out of jail or
> to minimize their penalties. Indeed, the State's enforcers are wary of
> creating martyrs. The very concept of martyr exhibits the power of
> Information; what is a martyr but a corpse with a good story?
> 
> High-Profile Counter-Economists have higher risks because they are so
> easy to detect. They gain the advantage of additional information
> flow, from themselves to the rest of the market. To the extent they
> succeed, they become inspirational.

Konkin said those who pursued both Low- and High-Profile
simultaneously could do so through a third category: The
Counter-Economic Community. Konkin notes the benefits of having allies
who are also participating in the counter-economy and opting-out of
the Technocracy. This is why it is going to be important to form some
level of a community as a mutual support network that allows for a
life "off the grid." Konkin wrote:

> One may pursue any degree of notoriety (or, to put it another way,
> freely advertise one's services) within the community of fellow
> counter-economists while not informing the State, its agents, and, of
> course, its informers. To do that, one needs to control the flow of
> information about oneself.

One of the great insights outlined by Konkin in Counter-Economics is
the importance of controlling the flow of information about yourself,
"in particular, the information flow from you to the State." Konkin
says the two obvious ways to escape the State's notice is to not exist
and "if you do exist, don't tell anyone about it." The goal then is to
reduce interaction with the State and/or private companies who want to
scan your face, record your life, and force you to submit.

There are many ways to approach this goal. For example, Konkin noted
that some aspiring counter-economists have chosen to "cut themselves
off from contact with anyone who might get to know them, get and stay
off all mailing lists, operate through cash and never use banks, and
even avoid legal residences, living in trailers as nomads or on
neglected land in caves or makeshift structures." While this may sound
extreme to some, for a brief period in the 1960s these individuals
promoted the philosophy of Vonu, or invulnerability toward coercion,
and attempted to avoid all contact with the State. Tom Marshall, aka
Ryo, was the main proponent of Vonu and often wrote about finding his
version of freedom by completely opting out of society and living
solitary in the wilderness or in his RV. Some of those who choose
Option 2 may be interested

in Vonu, but in my experience most people seem interested in living
with their family or in a community of like-minded people who do not
want to submit to the digital prison rather than alone. If any lesson
is learned from the proponents of Vonu it is that opting-out is
absolutely possible whether in a high-profile counter-economic manner
or an extreme low-profile Vonu lifestyle. (For those interested in a
deeper look at Vonu I recommend checking out Vonu: A Strategy for
Self-Liberation by Shane Radliff)

Both Konkin and Ryo warned of the difficulties facing those seeking
liberation and privacy within the city. However, in the increasingly
interconnected digital world in which we live privacy can be difficult
even in rural areas. Whether you choose to Hold Down The Fort and
build community in the city or town you live or Exit and Build your
community in a new location, the goal is to limit interaction with the
Technocratic State. This is where we can learn from the Vonu
enthusiasts who talked about "interfacing" with the rest of society on
a selective basis.

Konkin says one way to interface with the "overground or establishment
economy" (or mainstream world in general) is to create a fictitious
identity who takes the risks. In this case you can drop this identity
at a moment's notice if necessary. In the digital world it is easy to
create an alternative persona online, but it is more difficult to be
truly disconnected from your online identity. In my journalism career
I have seen governments track people with phones, cameras, computers
and GPS and even crack encryption. As Konkin notes, "if the State's
agents are closing in on this alter-ego, as long as you wear the guise
they are closing in on you." Additionally, anything you gained while
using the false identity, accounts, contacts, and property, would be
lost.

Konkin viewed false personalities as valuable, but ultimately he
believed it was necessary to categorize your information flow into a
system of layers. For example, at one layer you must reveal some
information in order to interact with the rest of the world. This
information can include "that you have a product or service, how much
it will cost, what you will accept in payment, how you can be
contacted, and when are you or it available. If there are multiple
payments, credit arrangements, repeat business, and post-sale
follow-up involved, still mo re information must flow from you."

When purchasing or selling a product, working for an employer, or
traveling you will leave a digital paper trail and also are more
likely to face the biometric tools of the Technocracy. Again, if you
live in a major city (or even a small city) and choose Option 1 these
are challenges you will have to face. In the U.S., China, UK, France,
Australia, India, etc., CCTV cameras connected to 24-hour "Real Time
Crime Centers" and "Fusion Centers" keep civilians in most major
cities under heavy surveillance. Increasingly these cameras are being
outfitted with facial recognition software. To combat this threat
there are two main strategies that I call "Be Invisible" and "Seek &
Destroy."

Be Invisible
------------
If your goal is to remain low-profile and Be Invisible there are few
actions you can take immediately:

* Stop carrying cell phones everywhere you go
* Stop using GPS
* Delete social media accounts and apps that track you
* Stop using credit and debit cards
* Cancel your bank account (use a credit union if you need to store
  your funds)
* Stop working jobs in the mainstream economy
* Stop paying taxes

Now, obviously some of these options are going to be extreme for some
people. It's all about the level of information flow you are willing
to accept. Some people can't quit their day jobs or cancel their bank
accounts or delete their social media accounts. I get it. This means
there will be some level of information about you available to those
with the money and the desire to buy it. There's nothing inherently
wrong with this. Perhaps your major concern is simply making sure the
cell phones and home assistants are not listening to you all the time.
So you choose not to buy an Alexa, Echo, etc. and you choose to only
turn your cell phone on when you need it. These are personal choices
and they will differ with every individual. The point is that you are
in control of the data flowing out from you.

When it comes to the digital world there is still an incredible value
to understanding how to use encryption. The number of digital devices
you use directly correlates with your level of privacy and liberty. If
your wifi, phone, laptop, tablet, etc. are all operating without any
type of encryption you are at the mercy of all manner of bad actors.
There is also the matter of off the shelf computers being built with
backdoors which allow government and private companies to access your
data without a problem. Of course, using VPN's (Virtual Private
Networks) is valuable but documents leaked by Edward Snowden proved
that the U.S. NSA can crack these as well. One tool discussed by
Konkin that is still valuable is public-key cryptography. We don't
have the space here to elaborate further, but I recommend learning
more about cryptographic privacy and Pretty Good Privacy (PGP)
encryption.

I will add one final caveat about digital communication: assume
someone can see it. Even if you are using encrypted messenger apps
that promise to destroy your messages instantly it is a safe
assumption that the American and Chinese governments can access it if
they so choose. All digital communications can be collected, stored,
and analyzed if someone wants it done. Always operate as if someone
else can see what you are sending. If something sensitive needs to be
communicated then say it in person in a room without computers,
phones, smart devices, or digital home assistants.

There are also some practical ways to fight back. In 2019 there were
several stories reporting that activists had found ways to fight back
against the surveillance grid. In Chile, activists pointed lasers at
drones observing their behavior from the skies during massive
anti-government protests. Hundreds of lasers pointing directly at the
drone caused it to malfunction and fall to the floor with a thunderous
applause and cheers from the people. In Hong Kong, protesters also
used lasers to fight against surveillance. To fight against facial
recognition cameras the activists began using high-powered lasers
aimed at cameras and police. As the corporate-state advances it is
likely they will discover how to avoid falling prey to simple lasers,
so it is important that the people are always looking for (or
creating) advances in technology that can counter the State.

Some companies and designers have recently begun advertising clothing,
face paint, glasses, and even certain hair styles that might be able
to bypass facial recognition. Berlin-based artists Adam Harvey has
launched two different projects seeking to overwhelm and confuse
facial recognition systems. His Hyperface project involves printing
clothing with eyes, mouths, and other facial features in an attempt to
deceive the software. Harvey also worked on the CV Dazzle project
which sought to use makeup and hairstyle to interfere with the
machines. Other artists have suggested that clothing that is shiny,
reflective, and can bounce light as well as military style camo could
disrupt the facial recognition nightmare and render you invisible.

Of course the most practical way to protect your face is to cover it.
There are several options available for those interested including
paper masks, the infamous Guy Fawkes ("Anonymous") mask, and 3D
printed faces designed to give you another identity altogether.
However, in China the State has made masks illegal and seeks to punish
anyone who would obscure their identity. This has not stopped intrepid
activists from continuing to use facial covers, but aga in the point
is that if you want to protect your privacy it will likely involve
breaking the law. If a law violates our right to liberty or privacy,
then it is the law itself which is unjust and it should be ignored.
However, it should be noted that in a world full of facial recognition
cameras someone with a mask will surely stand out and be detected
within moments. The less attention you bring to yourself the better.

Seek & Destroy
--------------
Before we go any further please note that this information is for
educational and research purposes. You are fully responsible for your
actions. Now for those who are dissatisfied with simply avoiding the
invasive technology and playing a digital game of cat and mouse the
Seek & Destroy option might better suit your needs.

We can look to Hong Kong again for another example. In August 2019,
activists targeted "smart lamps" that the local government says are
used to collect data on traffic, weather, and air quality. Activists
feared the smart street lights had been equipped with facial
recognition software so they tied ropes around the poles and pulled
them down to the ground. There are about 50 smart lampposts installed
around Hong Kong, all of which have cameras and sensors. These are the
same kind of smart lamps being installed in "Smart Cities" around the
world.

Again, I recognize this might sound extreme to some, but I have met a
diverse crowd of people who have expressed that if the technology
comes to their neighborhoods they will tear it down. This brings us to
the topic of monkeywrenching, a form of direct action originally
popularized by elements of the radical environmental movement,
specifically Earth First! and the Earth Liberation Front (ELF). Dave
Foreman co-founder of Earth First! outlined the tactics of
monkeywrenching in his book Ecodefense: A Field Guide to
Monkeywrenching. Foreman's book itself was inspired by Edward Abey's
book The Monkey Wrench Gang which tells the story of four individuals
who used sabotage to protest environmental damage in the Southwestern
United States. Between 1992 and 2007, the Earth Liberation Front began
sabotaging construction projects that threatened wild lands and
forests. Their tactics included tree sitting, non-violent blockades,
civil disobedience, and disrupting machinery.

One need not agree with the philosophy or even the cause of the ELF
and Earth First! to recognize that monkeywrenching can be applied to a
number of different causes. I would say what the Hong Kong protesters
did to the smart lamps was monekywrenching in defense of privacy and
liberty. As always, you decide the risks vs the potential benefits. To
those who are uncomfortable with the idea of destruction, remember
that every ending breathes a new beginning. We can build a world that
respects privacy and individual liberty on top of the ashes of the
Technocratic State's facial recognition cameras.

These are just a handful of suggestions on strategy and tactics for
maintaining some level of privacy and liberty. As Konkin correctly
noted the fight for privacy is a "dynamic, evolving system. It is a
non-violent form of an arms race where one side cracks the code and
the other develops a new system to top the old one."

Digital technology is a tool and like every tool it can be used for
good or for harm. In the hands of the technocrats digital tech is used
for control, spying, social engineering, manipulation, censorship, and
propaganda. In the hands of free people technology can be used to
heal, empower, educate, and build a better world. However, this better
world will not happen without a conscious effort to build it. We also
need a healthy skepticism towards emerging technologies which are sold
as the panacea to humanity's turmoil. Whether you choose to stay put
and build in your town or vacate the State and build elsewhere, it
will be necessary to participate in some level of community if only
for survival. Our best chance for survival is to band together with
others who choose to opt out of the digital future and form new
communities which respect privacy and liberty.

6. The Counter-Economic Community: Freedom Cells
------------------------------------------------
Throughout his writing Samuel Konkin refers to the benefits of
existing with an agorist, or counter-economic community. Although
Konkin never completed a detailed outline of how this community might
operate he does make a few helpful references. In the outline to
Counter-Economics, under the heading "Chapter Fifteen: Psychology
Counter-Economics," Konkin wrote: "Mutual Reinforcement, Going beyond
individual self-reliance and selfacceptance, the concept of
individuals working together counter-economically, developing trust
and honest interdependence, will finally be developed (after popping
up briefly all over the book). Beyond relationships and affinity
groups, we come logically to the idea of an active sub-society and/or
Movement of Counter-Economists, and that brings us to Part II."

Unfortunately, Konkin never wrote Part 2 or elaborated on the
community angle. The reality is that whether you choose to Hold Down
the Fort or Exit and Build community is going to be necessary to
survive the Technocracy. I have spent the last few years developing
the concept of Freedom Cells, which I believe lines up perfectly with
the counter-economic vision. Freedom Cells are peer-to-peer groups
made up of seven to nine people (with eight being ideal) organizing
themselves in a decentralized manner with the collective goal of
asserting the sovereignty of group members through peaceful resistance
and the creation of alternative institutions. Freedom Cells (FCs) can
be seen as a very specific type of mutual aid group where Agorism and
Counter-Economics play a key role. The name comes as a response to
State propaganda around "Terror Cells." I am consciously choosing to
reclaim the language and build cells that spread freedom.

Also, FCs act like cells in a body that are performing important tasks
individually while also serving the goals of the larger organism. From
this view, every FC is playing a vital role in spreading
counter-economic activity while also forming a part of the larger
network that will foster exchange of ideas and products between
different cells.

The number of eight participants is drawn from the research of Bob
Podolsky and his book Flourish!: An Alternative to Government and
Other Hierarchies. Podolsky is the protege of researcher John David
Garcia who spent twenty years researching how to maximize the
creativity of a group of people working together on a joint project.
After performing hundreds of experiments, he came up with an optimized
model based on groups of eight, which he called an octet or octologue.
The idea is that a shortage of individuals would leave the group
limited in capability, but with too many people the group is bogged
down with disorganization and a lack of focus. Podolsky recommends
forming octologues made up of four men and four women guided by
specific ethical tenets. Although Freedom Cells are also promoted as
groups of eight individuals collaborating together, they differ from
octologues in that they are heavily focused on decentralization. While
Bob Podolsky has outlined a detailed vision of how an octologue should
operate, I hope to provide examples of applications for FCs without
telling other FCs how to operate. The needs of each community will
naturally differ. Beyond a general agreement to respect each other's
right to be free of coercion I believe FCs should not be monopolized
by the vision of a single cell. I caution the reader to remember that
these ideas are a guide and not the final word on the literally
limitless possibilities.

In the beginning, individuals can work together to accomplish goals
such as every group member having three months" worth of storable
food, encrypted communication, a bug out (or Exit and Build) plan, and
ensuring participants have access to firearms (or some form of
self-defense) and know how to use them safely and proficiently. All
the while cell members make themselves readily available to render
mutual aid to their cell in whatever form that may be necessary. After
you have established seven - nine people within a FC each individual
should be encouraged to then go on their own and start another FC,
especially if the original members are not living in close proximity
to one another. Living reasonably close to each other will allow for a
quick response time in emergency situations. Once again, every member
of the FCs should be encouraged to start additional cells.

Eventually the original cell would be connected to seven or nine
additional cells through individual members for a total of 70-90
people. Imagine the strength and influence these cells could exert
once connected in the digital world via FreedomCells.org and in the
physical world where possible. The creation of the Freedom Cell
Network also serves as a social network for travelers looking to do
business in the counter-economy with other like-minded people. Through
building and supporting alternatives such as local food networks,
health services, mutual defense groups, and peer-to-peer economies and
communication networks, FCs will be better able to disconnect and
decouple themselves from the Technocratic State. Once groups become
large enough in numbers it becomes quite possible for participants to
opt-out en masse and to secure their liberty.

This is the model we followed within The Houston Free Thinkers
activist community and The Free Thinker House community space. We
began by building gardens and selling the crops via the Nextdoor
community. We also sold juice and kombucha tea made using fruits
harvested from trees of neighbors who understood our goals. We started
with a small group of about three to four people meeting and
discussing the goals and themes of our cell. The goal is to have
skills and knowledge diffused throughout the group. This way if one
person leaves the group the knowledge is not taken from the cell. For
example, knowing that every cell member can perform CPR, use encrypted
communications, shoot a gun, or communicate the counter-economic
message may be important for your cell. Obviously, certain individuals
will be more skilled or knowledgeable in some areas, but there are
foundational skills and information that should be common among all
cell members.

Our group also used the structure to educate each other on specific
topics of interest. Perhaps your FC meets and agrees to learn
everything available on permaculture or a particular philosophical
concept. You can then choose to divide the topic up among your cell
and return two weeks later to educate each other. Perhaps your cell
joins the Cell411 app and responds to emergency alerts in your
community. Several cells could join together to cop watch or actively
resist and disarm violent police or other agents of the State. A
Freedom Cell could connect with other cells for a covertly organized
guerrilla gardening acti on.

With the constant barrage of fake news coming from the establishment
media a FC could quickly research and debunk incoming propaganda. FCs
can organize alternative exchange networks that encourage local
artisans and entrepreneurs to sell their unregulated crafts and accept
alternative currencies. In a "Shit Hits the Fan" scenario, FCs could
have prearranged bug out locations stocked with supplies. If several
FCs were equally prepared, you now find yourself with a small
community of empowered individuals as opposed to being forced to
defend yourself alone.

When it comes to dealing with the Technocracy, FC members can make
commitments to limit the amount of information which is communicated
via digital technology, saving important conversations for
face-to-face. Additionally, members can share tips for evading the
watchful eyes of the State. However, the real value of using Freedom
Cells to build the counter-economic community is strength in numbers.
If your decision not to adopt the mandatory biometrics or social
credit goes from frowned upon to illegal you will face punishment for
choosing not to participate. As we noted earlier, the goal of social
credit schemes is to socially engineer society to be blind, dumb, and
obedient followers of the Technocracy. The State is going to use the
Technocracy to promote the idea that anyone who chooses to opt-out is
the problem. Even the most strident individualist will find it hard to
survive "off the grid" once the Technocracy is complete. Of course,
the social credit score will also discourage friends and family from
associating with those who have been blacklisted.

The solution is to collaborate with other individuals and families
who choose not to submit. The reasons for opting out will vary from
person to person, some may opt-out to avoid mandatory vaccinations,
others to practice their religious beliefs in peace, while still
others will exit to protect the privacy of their future progeny.
Frankly, if the choice is mandatory obedience to the Smart Grid or a
life "outside" of mainstream society, it will take a coordinated
effort by many determined individuals to create a world of networked
communities where individuals can thrive, raise their families,
conduct business, and trade while still living free. I believe the
concept of FCs can help those of us who will do anything to be free
from the web of the Technocracy.

In conclusion, I offer these "12 Tips For Building Freedom Cells" as a
starting point for launching your group. Please adapt these to the
specific needs of your community:

1. Understand Your Motivation - I find it valuable for every person
   considering starting a cell/circle/hub to know why they are
   pursuing such a goal. What are your motivations and interests?
   Knowing this before you start a group will save you time. Finding
   ways to opt-out of the Technocracy is an obvious goal, but what
   else drives you?

2. Identify Potential Candidates - Are they mentally, physically,
   spiritually sound for your goals?

3. Discuss Common Themes - What are the driving forces bringing the
   group together?

4. Identify Strengths and Weaknesses - Take an honest look at the
   strengths and weaknesses of each individual as well as the group
   as a whole.

5. Evaluate Desired Level of Freedom vs Security - Every individual
   may have a different desired level of freedom and as such will
   have different aims and acceptability of risks. When it comes to
   the Technocracy this is especially important to remember. How free
   do you really want to be? How much privacy do you want to keep?
   What will you do to attain such a goal?

6. Set Short Term and Long Term Goals - What can your cell accomplish
   in three months? Six months? A year? Set goals as a group and hold
   each other accountable.

7. Mindfulness Training - Incorporate practices like Nonviolent
   Communication Training and group meditation into your cell.

8. Accomplish Goals - Document each goal successfully met by the cell
   or individual members.

9. Ongoing Group Education, Communication - Continuously expand your
   cell's knowledge, skills, and supplies.

10. Promote/Market Goals and Accomplishments - Use the power of
    social media (when safe) and marketing to let the world know how
    much more prosperous you are in the counter-economy.

11. Identify Strategies For Creating Income/Independence - Leverage
    the power and number of your cell to create counter-economic
    income that cannot be taxed by the State.

12. Network with Other Cells - The key to opting-out of the
    Technocratic State is building the counter-economic community.
    This means not only your immediate community of allies but the
    larger network of cells in your city, state/province, nation, and
    the global community. It is up to you to make an effort to
    network with other activists and free thinkers.

7. The Counter-Economic Underground Railroad
--------------------------------------------
For the last two years, I have focused on developing potential
solutions for liberating hearts and minds from the grip of the
Technocracy. I have come to the conclusion that whichever path you
choose to take proper precautions and emergency plans are necessary.
The cliche hope for the best, prepare for the worst applies here.
While I have offered suggestions to those who choose to Hold Down the
Fort, it is imperative that some individuals choose to Exit and Build
in the event that the "fort" collapses. These forward thinking
individuals may choose to move out of major cities to rural areas with
less invasive practices or move to a nearby region with relatively
more liberty and privacy. The goal is to establish a network of free
communities that could serve as safe havens for refugees of the
Technocratic State. This is what I call the "Counter-Economic
Underground Railroad," or simply the Underground Railroad.

This Counter-Economic Underground Railroad is modeled after the
original "Underground Railroad" of the American colonial era. In the
late 1700s, former slaves, abolitionists, and sympathetic civilians
formed a decentralized network of safe houses that allowed slaves to
escape from bondage. Most of the freed slaves made their way north to
Canada but there were also safe houses helping people escape south to
Mexico. It has been estimated that as many as 1,000 slaves escaped
per year between 1850 and 1860. The Underground Railroad was
inherently counter-economic because under the Fugitive Slave Act of
1793 law enforcement in free states were required to help
slaveholders recapture runaway slaves. Fortunately, many officials
had the good sense to ignore the unjust law and help former slaves
make their way to freedom. This was a conscious decision to violate
the State's demands and trade risk for a perceived benefit.

In the notes to his unfinished chapters "Smuggling Counter-Economics"
and "Human Counter-Economics," SEK3 mentions the Underground Railroad
as an example of people smuggling. In "Smuggling Counter-Economics" he
writes, "Smuggling 'people' is introduced, to be used in the 'Human
Counter-Economics' Chapter, with underground railway of the Civil War
period." It is important to note there is a difference between
smuggling a person voluntarily and involuntary human trafficking done
under the threat of violence.

Smuggling typically involves choosing to transport goods which the
State has deemed illegal or avoiding taxes on the transportation of
said goods. People or human smuggling involves one individual paying
another to be smuggled across international borders. While smuggling
typically involves some form of contractual agreement that ends upon
arrival to the destination, human trafficking involves the use of
force, abduction, fraud, or coercion. This is often used to induce
forced labor or sexual exploitation. Simply put, smuggling becomes
trafficking when the element of force or coercion is introduced. Under
Konkin's counter-economic theory, human smuggling is legitimate
because it does not involve the initiation of violence or coercion. In
"Human Counter-Economics" SEK3 provides a little more detail of his
vision:

> Underground Railway slaves moved counter-economically, variants of it
> still in use; Refugees covers Counter-Economics of freeing people from
> greater tyranny, Minority groups are covered here first, how they
> survive in hostile societies, and the sub- societies they form,
> usually overwhelmingly counter-economic...

Although we don't have the finished work, it is interesting that
Konkin mentions minority groups and "how they survive in hostile
societies, and the sub-societies they form." In the age of the
Technocratic State those choosing to opt-out will be the minority
groups surviving in hostile societies. The sub-societies we form could
be the free communities which keep the flame of liberty burning into
the future. Imagine the Freedom Cell Network expanding to both urban
and rural environments around the world. Those who stay in the cities
do what they can to combat the Technocracy and educate others of the
dangers. Those who exit build communities which opt-out of various
levels of invasive technology (based on their preferences) and also
educate others about the benefits of unplugging. The two strategies
work together to pull as many minds out of the technocratic matrix as
possible.

Regardless of whether you see value to counter-economic theory there
are practical lessons to be learned from the Underground Railroad. The
individuals who chose to open their homes to runaway slaves made a
conscious decision to risk arrest and imprisonment so they could help
a fellow human being. The police and government officials who
disobeyed the State joined the counter-economy when they realized that
doing what was right was more important than doing what was legal. The
allies who smuggled former slaves across international borders also
risked their freedom for a just cause. These are the same decisions I
believe many of us will face in the coming years as the Technocratic
State continues to grow.

The individuals who choose to Exit and Build now can purchase land,
build housing, and lay the foundation of a more free society. While
this will initially serve to provide for their own families, if the
shit hits the fan the Underground Railroad will help slaves of the
Technocracy escape to these communities. This is the role I am
choosing to take. I do not believe my place of birth (the United
States) is salvageable. I do not see this as abandoning ship or giving
up hope but rather I am consciously choosing to build the future I
desire with the understanding that others may need help in the near
future. I believe by exiting the city, moving to a less invasive
region of the world, and building on land I will find my inner peace
and have an opportunity to help others. This might not be the
particular role you choose, but there are other ways we can each be of
service.

As in the original Underground Railroad we will need sympathetic
individuals within the hostile society who are willing to house and
transport those seeking safety. We will need low-level employees of
the State willing to take a bribe or simply turn a blind eye to the
Counter-Economic Underground Railroad. We will need "white hat"
hackers willing to create technological tools tocombat the omnipresent
eyes and ears of the smart grid. We will need individuals who leave
behind comfort to develop the network of free communities that might
soon house refugees of the Technocracy. Finally, we will need
organizers who can help connect each of these individuals in as
decentralized a manner as possible.

I do not claim to know exactly how this Counter-Economic Underground
Railroad will develop. The only thing I know is that it must develop
as soon as possible. If we choose to sit by idly while the
Technocratic State comes into view we are abandoning future
generations of our human family. If you are reading these words you
have the opportunity to be a part of the solution. The only way we
will make it through the digital dystopia is to put aside minor
differences and build the world we know is possible.

8. Final Thoughts on Surviving the Digital Dystopia
---------------------------------------------------
In late 2009 I began questioning the world around me and wondering who
was running the show. I consumed as much material as I could find on
the history of government, banks, the ruling class, and power. For a
moment I was convinced that the end of the world, a government
collapse, a police state, or something of that sort was coming. Over
time my fears receded as I took a more reasoned look at the world
around me and also took note of the many positive advances unfolding
in that world. Unfortunately, as I write these words my fears of an
impending doom have returned. Only now I see the impending threat
coming from what I am calling the Technocratic State.

This State is unlike any other previously seen in humanity's history.
There is an elitist, totalitarian ruling class made up of the
technocrats and mad scientists combined with digital technology not
available to past totalitarian regimes. This does not bode well for
the future of liberty for all people. The modern conception of liberty
is barely 300 years old itself and it appears as if humanity may have
trouble maintaining and expanding such a necessary principle.
Apparently humanity is still deciding whether concepts like privacy
and liberty will continue to thrive.

Will liberty expand to all lands of the Earth or will the tyrants
continue to reign? I don't pretend to know exactly how the future is
going to turn out, but I do know the outcome will be determined by
those who choose to step up and take action. The direction will depend
on the values and the principles of those who get engaged and seek
solutions. Those who sit on the sidelines will merely be cogs in
someone else's machine. The time for passivity has come to an end. If
you do not want to lose privacy and eventually all liberty you must
act to protect yourself and your loved ones.

The Technocracy is coming into full view and everyday it becomes more
clear that the masses will swallow the poison without hesitation.
Opting-out of the conveniences and pleasures of the smart grid will
not be a popular choice. Saying no to mandatory biometric systems will
involve some level of risk. However, it may soon be necessary to make
these decisions to preserve your privacy and liberty. I have attempted
to outline why I believe Samuel E. Konkin's theory of
Counter-Economics can be applied to the battle against the
totalitarian surveillance state. Counter-Economics provides a
philosophical foundation to the simple act of saying "no" to immoral
or unjust state rules and doing what you must to thrive.

The facts are all there: when the State moves to prohibit an activity
or a substance they create a counter-economy of people who will
voluntarily choose to violate the State's demands and do what they
feel is necessary to survive and thrive. This counter-economy is one
of the largest economies in the world and none of it is controlled by
a centralized authority. The power of CounterEconomi cs lies in
recognizing the potential of a mass opting-out of systems that do not
align with our values and are inherently immoral. Just as in the
original Underground Railroad I am calling for the creation of safe
houses, the transporting of refugees, and the conscious objection to
laws which try to criminalize those who help runaways. The
"conductors" of the original Underground Railroad did what they knew
was right because it mattered more than blindly following words on
pieces of paper.

We should take inspiration from this example of counter-economic
activity and consciously opt-out of the technocratic control grid. If
we form Freedom Cells which promote counter-economic activity and
encourage skepticism towards the Technocracy we may have a chance to
form a competing society of free communities that choose to reject
various levels of invasive digital technology. We cannot face this
monumental task alone. It is of extreme importance that we find a way
to form alliances and coalitions in the interest of saving our
collective liberty.

I believe opting-out of the Technocratic State should go hand in hand
with opting-out of the military-industrial complex (MIC), the central
banking system, the school system, the corporate-media complex, and
the pharmaceutical complex. This will not be easy or even possible for
all people in all situations.

Dowhat you can, where you can. Refer back to Vertical and Horizontal
Agorism when you need ideas for opting-out of a wide range of
institutions and organizations that do not represent your interests. I
also recommend spending time going over my explanations of the Hold
Down the Fort and Exit and Build strategies to see where you think
your path may lead you.

It is ultimately up to each individual to decide their future and the
totality of each of our choices will set the path for all of humanity.
I have attempted to understand how to motivate others to take action
and I have found that leading by example is the best way to inspire
others. We need not all take the exact same route to achieve success.
In fact, the more diverse the field of individuals employing the
counter-economic ethic the better off we will be. Each of us will be
inspired and motivated by different stimuli, and we will each reach
and inspire different people.

Not only are we all motivated differently but our habits and
lifestyles will also shape our ability to be free from the
Technocratic State. The level of privacy and liberty you maintain in
the coming years will be decided by your willingness to change, adapt,
and abandon habits which weaken your ability to be free of systems of
oppression.This struggle between what you want (liberty) and your
actions (a variable dependent on you) decides whether your desires
become reality or remain a fantasy.

Level of Freedom Desired + Willingness to Change = Your Actual Experience
of Freedom

I call this the Freedom Formula -a simple equation in which your level
of freedom desired plus your willingness to change and adapt equals
your experience of liberty and privacy. To determine the best path for
yourself it is important to understand what your goals are and what
your ideal vision of liberty and privacy looks like. This is part one
of the formula. Only after you clearly identify what you want and what
you do not want can you begin to ask what you are willing to do to
achieve this goal. While some might call this a sacrifice, the reality
is we have long been trading our invaluable privacy and liberty for
convenience and pleasure. Do you value the convenience of skipping the
line at the airport in exchange for your faceprint more than you value
privacy? Is it worth losing privacy just so you can download the
latest apps and trends?

As you imagine the answers to these questions I humbly request that
you take a moment to consider the consequences of apathy and
complacency. Future generations have never been more dependent on
those living today to correct the course of humanity. We have reached
the point where children are growing up without any sense of a world
without the Internet, without smart phones, and without a smart grid.
These generations will likely lack a true understanding of the value
and importance of privacy because they are being raised in a culture
and time where privacy is hardly a concern. As Artifical Intelligence
improves, the 5G Smart Grid goes live, and the Internet of Things
springs into existence we are going to face difficult decisions
regarding privacy. If we choose to be the ones who planned ahead,
opted out, and formed free communities we can leave future generations
a world that respects the principles of liberty and privacy. While my
optimism is lacking as of late, I do believe there is still time to
lay the foundation for the Counter-Economic Underground Railroad and
build the better world we know is possible.

Part 3: Counter-Economics: From the Back Alleys to the Stars
------------------------------------------------------------
by Samuel E. Konkin III

Originally Published as Digital Edition: November, 2018.
Published by KoPubCo at Smashwords

KoPubCo is the publishing division of The Triplanetary Corporation
5904-A Warner Ave., Ste. 164 Huntington Beach, California 92649-4689
Website: kopubco.com | email: info@kopubco.com
Reprinted here under a Creative Commons Attribution 4.0 CC

Samuel E. Konkin III began developing his philosophy of Agorism and
the strategy of counter-economics in the early 1970s before writing
the seminal New Libertarian Manifesto. The book laid out the black
market-anarchist platform in all its glorious detail. Konkin's second
book, An Agorist Primer, was released after his death in 2004. The
work further illuminated the path to what Konkin called New
Libertarianism or Agorism. Before his death Konkin was intending to
release another book known as Counter-Economics. Konkin envisioned the
book as an academic tome that would rival Marx's Communist Manifesto.
Unfortunately, the book was never completed and Konkin's vision for
the release was not realized. Thanks to Konkin,s friend Victor Koman,
what survives of the book has now been released to the public in
digital format. After hearing that Konkin had an unfinished and
previously unseen book that was to be released, I decided I would
"finish" the work as a sort of thank you to the original agorist for
his effort to demonstrate the effectiveness of the economy that exists
outside t he tyrannical grasp of The State. Upon reading the completed
six chapters and the outline to the entire book I became overjoyed at
the possibility of bringing the book to life.

However, the book you hold in your hands is not the same vision Konkin
outlined. I do not know if I am capable of creating a book that would
satisfy Konkin's ambitious plan. Rather than attempting to recreate
Counter-Economics as Konkin described, I decided to take Konkin's
final work and update it to make it relevant to the 21st century and
beyond. I believe Konkin's essays and my additions are key information
for any individual or community interested in participating in
counter-economic activity as a way to create more freedom in their
lives. I give all credit to Samuel E. Konkin for laying down the
foundation on which myself and many other counter-economists build.

I have included Konkin's original introduction and finished chapters
as well as his personal notes for unwritten chapters. The following
chapters make up six of the ten SEK3 wrote before he died. The other
four have not been located as of January 2020. I present them to you
as they were written by Konkin and edited by Victor Koman. Taken
together these chapters illustrate a wealth of evidence for Konkin's
theories regarding the power of the counter-economy. Upon reading this
evidence the reader should ask the next obvious question: what do we
do about it?

Konkin argued that all that was necessary was to raise the
consciousness of the average person to recognize the opportunities
that wait in the untaxed, unregulated counter-economy. If a mass of
principled, consistent individuals resisted the extortion of the State
and moved their energy into the counterecono my the State would become
impotent. From the 1980s until his death in 2004 Konkin recognized
some of the earliest evidence of the success of the counter-economy.
As we head into the 2020s the evidence is even greater than Konkin
might have imagined. Yet once again we are confronted with the
question: what do we do about it?

Do we take the evidence before us and use it to inform our actions as
any reasonable person might? Or do we ignore the obvious solution in
favor of continuing to play the political divide and conquer game? The
choice is yours, my friends.

- Derrick Broze

62

Background
----------
(The following note was written by award-winning author Victor Koman,
PhD. It was originally published as the afterword to the ePub Edition
of CounterEconomic s: From Back Alleys to the Stars, the inspiration
for How to Opt-Out of the Technocratic State)

The author of Counter-Economics, Samuel Edward Konkin III, died
February 23, 2004 at the age of 56. He left his original manuscript
with me in the hopes that a three-time Prometheus Award recipient and
publisher (KoPubCo Books) would shepherd the book to publication, much
as I had with Konkin's New Libertarian Manifesto (KoPubCo, 1983 &
2006) and the posthumously published introductory book An Agorist
Primer (KoPubCo, 2008). The latter manuscript only required a light
amount of updating, which allowed it to be published fairly quickly
(by libertarian standards) after his death.

Counter-Economics, on the other hand, proved to be a greater
challenge. The manuscript, written around 1984-85, consisted only of
the first six chapters out of twenty in his outline (although four
more chapters are rumored to exist somewhere in digital form, but have
yet to be found). Moreover, extensive quotes from contemporary news
and magazine sources constituted a significant portion of the
manuscript. Because these references are now dated--for example, the
Soviet Union's underground economy provided him with voluminous
illustrations of statist economics gone utterly awry and Venezuela,
the current poster-child for socialism's horrors, had yet to begin its
collapse--finishing the book would have required a thorough
re-application of Counter-Economics to a world a third of a century
removed from that of the original manuscript.

The world has changed significantly since 1985 (with the proviso plus
c'est la meme chose): the collapse of the Soviet Union, due in no
small part to CounterE conomics; the rise of Islamic terrorism; the
return to a war-based (or, at least, war-accommodating) establishment
economy; the scattershot legalization (but not decriminalization) of
marijuana; the privatization (however meager) of space travel; the
explosion of both computer encryption power and hackers" ingenuity;
the rise of digital currency A la Bitcoin; the ubiquity of
surveillance systems; the abandonment of any vestige of mouthed
support for Liberty by the elites of US political parties, corporate
boards, and governments worldwide. All these events have only served
to increase, not decrease, the size and scope of the CounterEconomy.

In re-reading the chapters for this edition, I found echoes of the
past reverberating in the present--it turns out that even though the
references are dated, the principals underpinning CounterEconomics
are consistent and timely, and you will see how they apply to current
events and how they can resolve today's controversies and guide
tomorrow's choices in your own life and society at large.

Scanning the manuscript in was an immensely frustrating effort (in
the mid-1990s, using OmniPage with a primitive scanner). Sam's aging
IBM Executive proportional-space typewriter had a floating "t" key
that caused an OCR spelling error in almost every word containing
that letter, as well as a spacing error in nearly every word with an
"o". I spent hours and hours (as I could manage) over the ensuing
years correcting errors and making Sam's endnotes consistent with
APA 6th Ed. standards.

Because the book proposal had already made the rounds to several
publishers and been rejected, Sam never felt it worthwhile to put any
more effort into a rewrite. When Sam gave me the manuscript (probably
1993 or so), he doubted its marketability almost a decade after its
writing, but I told him I might be able to do something with it and he
gave me his permission to do so. I knew, however, that I would not be
able to complete the book by my 1990s self without some academic
underpinning. Over the ensuing 20 or so years, I completed four
university degrees, from an Associate of Arts, through a BSIS and an
MBA, to an IT PhD in Information Assurance and Security. I also
published the aforementioned SEK3 books and republished a few of my
own through KoPubCo. All that while working full time at my web-app
development job, 1996-2014. Finally, I felt ready to complete Sam's
magnum opus with the scholarship and ideological consistency it
deserved.

However ...

At the urging of fellow award-winning author J. Neil Schulman, I
attempted to find some reference by Sam to the Counter-Economics
manuscript in my e-mail logs for the 1990s. Searching a 32 Mb text
file (saved back when a megabyte was a megabyte!), I found several.
And in them, I discovered something I had forgotten over the decades.
In one e-mail, dated 11/28/1999, Sam wrote: Although my
"unpublishable" book, Counter-Economics, was only half-written before
I gave up trying to find a New York publisher back in the early 1980s
(best reply was from one who said, "This is an example of the most
immoral writing of the Libertarian Movement..." yeah!), I have around
10 chapters I could retype and put on the web.

In a post to the Left Libertarian List, dated 1/26/00, Sam wrote: "I
mentioned before that I had written ten chapters of a book called
Counter-Economics back in the early 1980s; it was turned down by a
dozen Establishment New York publishers, two citing the "extremist"
ideas as the reason and the others less honest. Each chapter described
a particular area of C-E with the effect building up chapter by
chapter until the reader realizes that it covers all Human Action.

Victor Koman apparently scanned and OCRed the manuscript pages and at
Christmas this year presented them to me as a present. If I keep
getting encouragement "... I'll put them on line"...

The upshot of this is that I had totally forgotten about this exchange
with Sam. All these years, I'd been holding onto the ms. in the hope
of completing it with a scholar's research and writing skills because
I wanted to protect the work's integrity, only to (re)discover that
Sam had been ready to release the manuscript as-is, "way back in the
previous millennium...

So here it is, The Incompleat Counter-Economics. I have no idea where
the four Lost Chapters may be, but I will reissue the e-book with them
if/when they become available. The only changes I made to the
manuscript were the correction of a few typos, the rewording of an
unclear sentence or two, and the aforementioned APA-formatting of the
chapter endnotes. Shortly after the publication of this e-book,
KoPubCo will make available a free PDF of the actual manuscript pages,
along with additional matter such as scans of the actual articles SEK3
referenced in this book. What you have in your hands right now,
though, is the purest distillation of CounterEconomics and
proto-Agorism, presented by the genius--Samuel Edward Konkin III--who
went beyond Von Mises and beyond Rothbard to provide you with the
knowledge, strategy, and tactics to free yourself, and society, too.

Introduction: by Samuel Edward Konkin III
-----------------------------------------
Are you reading a self-help book, a personal liberation manual, a
financial advisory, an esoteric economics text, an anti-political
platform, a muckraking history, a sensational expose of underground
life, or an anarchist cookbook? The answer is all of the above.

That may sound confusing, but the main purpose of this writing is to
extract unity from these topics usually unconnected in most minds
today. I hope it will indeed amuse and excite the reader about
another, accessible way of life, give new explanation to some of the
vexing problems that beset our social life, and perhaps solve a few.
Along the way, a few more burdens may be lifted off the back of many
of the oppressed--especially those who have chosen to fight back.
Above all, may some of you be moved to act--on your own behalf. That
is where it begins--with the self. If the individual has rights and
chooses to exercise them in the teeth of organized, institutionalized
opposition, Counte rEconomics begins. One need not be an anarchist or
even much of a libertarian to counter-economize, and most to date
have not been. Yet if a socialist or fascist or even one devoid of
ideology or thought learns and applies counter-economic acts, the
purest libertarianism has been, to my mind, advanced. To that end, I
have deliberately left the philosophical implications of CounterE
conomics to the end of the book. And to make sure you've found wading
through the subject exciting enough to take a plunge into deeper
theory, I've put the economics next to the end.

This is not meant to lure the resistant or to trap the unwary. This
book is neither treatise nor manifesto; the author has those available
elsewhere. CounterEconomi cs is meant to make Counter-Economics as
accessible to as many as possible.

Up front, then, with the deep stuff in the back, here's what
Counter-Economics is. Economics is the study and practice of human
action involving voluntary exchange. Establishment "economics" is the
presentation of explanations of human action in such a way as to
benefit the establishment or ruling segment of society. The former is
an attempt at science; the latter is conartistry. Counter
Establishment Economics is the study and practice of that part of
human action committed in spite of the official legitimacy (government
legislation) to the contrary.

As counter-establishment culture proved unwieldy in the 1960s and was
shortened to counterculture--though not without subsequent
misrepresentation of its aims--counter-establishment economics will
be shortened to countereconomics. To avoid misrepresentation, what I
refer to as Counter-Economics will be capitalized consistently and
defined in this way:

Counter-Economics is the theory and practice of all human action
neither accepted by the State nor involving any initiatory violence or
threat of violence.

If this formulation appears a bit arcane, it is required explicitly to
exclude murder and theft from Counter-Economics. Governments have a
near-monopoly on murder (war) and theft (taxation and inflation) and
we can leave the few freelance statists out to give us a sharp, clean
distinction. Given, then, the libertarian moral code of not harming
your fellow-sentient, Counter-Economics is doing what you want, when
you want, for your own good reasons. And, with that, we push the
theory to the back and get ready to survey the field.

The focus of the book is to show the reader what Counter-Economics is.
We'll look at it in every aspect of life in all parts of the globe and
beyond. Black market; grey market; dissidence both foreign and
domestic; tax resistance; economic feminism; underground schools and
shopping centers; gold, silver, barter, and illegal aliens; creative
computing and secure information systems; gun-running and
Bible-smuggling; life extension and intelligence increase; selff
ulfillment and psychiatric resistance; sensational exploits and cold,
hard, historical revisionism; alteration of inner space and outer
space, it's all here.

After seeing for yourself, and then understanding in full, if you wish
to try it... you'll find that you already have! If you wish to expand
your freedom, you'll undoubtedly find some new ideas. Most important
to me, if you are already expanding your freedom and were concerned
about its validity, you hopefully will see the picture in full and
judge for yourself your rightness. If any counter-economist changes
her or his mind about giving up a life of free marketeering to return
to the "straight," sick, statist society, this book will have
half-fulfilled its purpose. And if others perceive her or him in a
new, more sympathetic light, the other half is fulfilled. And now on
to real human action.--SEK3

1. Tax Counter-Economics
------------------------
"A vast underground economy rivaling the entire output of Canada in
size, involving as many as 20 million people and generating hundreds
of billions of dollars in untaxed income, is thriving beneath
America's economic mainstream. "All told, more than half a trillion
dollars a year--about one quarter of recorded output in the U.S.--is
involved, according to some estimates. Even the most conservative
judgments start at nearly 200 billion."

U.S. News & World Report Cover story, October 22, 1979 "There's
something happening here. What it is ain't exactly clear" --Stephen
Stills, "For What It's Worth" (recorded by Buffalo Springfield)
Something called the "Underground Economy" has been discovered by the
largecircu lation, "Establishment" media. The Los Angeles Times, for
example, during the years that the author kept close watch, ran the
following stories:

* July 17, 1979 "100 Billion "Underground Economy" Revealed" (Section
  IV, Pages 1 & 11).
  
  "Anybody who has looked at the subterranean economy will tell you
  it's very large," Allen Voss of the General Accounting Office told
  the House Ways & Means oversight subcommittee.
  
  "Officials describe the underground economy as consisting of
  persons who report less than they earn, including those who engage
  in bartering or work for cash only, and those who don't even bother
  to file a return."

* September 18, 1979 "Underground Economy" Comes Up for Air" (Part
  II, Page 5). Columnist Robert J. Samuelson complains, "Government
  agencies have a way of conferring respectability on ideas, and
  that's just what the Internal Revenue Service has done for the
  "underground economy." Until recently, this was just another random
  subject for newspaper and magazine stories.  Now the IRS has
  delivered a heavy report estimating that perhaps one dollar in
  every ten of income has gone underground, and is not reported for
  tax purposes.  Suddenly we have a full-scale social problem."

* January 9, 1980 "Money, a Question of Give and Take," subtitled
  "Tax Man Cheated Out of Billions" (Part IV, Page 5), leads off with
  "I feel wonderful about not paying taxes," says R. M. Jones. "I
  don't like to support a paper-tiger government and I don't like
  taking care of people on welfare."

* April 2, 1980 "Evasions of Billions of Dollars In Income Tax
  Feared," subtitled "U.S. Concerned Over Unreported Funds Flowing
  Into Overseas Bank Accounts" expands the concept internationally.
  "The abuse of so-called "offshore" accounts by wealthy Americans
  bent on tax evasion, as well as by narcotics traffickers, corporate
  bribe-payers, and others--has reached unprecedented proportions,
  according to many experts."

* April 7, 1980 "On the Side of the Lawless," subtitled "Americans"
  Tolerance of Underground-Economy Tax Cheats Costs Them Billions,"
  is an editorial attack by Times editorial writer Ernest Conine.
  Says he, "Most Americans are inclined to wink at such goings on.
  That isn't very smart, to say the least. The fellow who cheats on
  his income taxes, whether he's a carpet-layer or a multimillionaire
  businessman, is stealing from honest taxpayers just as surely as if
  he stuck a gun in their ribs."

* April 17, 1980 "More and More Refusing to Pay Taxes," subtitled
  "Resisters and "Patriots" Insist U.S. Has No Right to Levies" does
  not mention the "Underground Economy" anywhere (Part 1-C, Pages
  7-8). Yet it begins, "A growing number of Americans are refusing to
  file income tax forms or to pay Uncle Sam another penny. Most of us
  spend several months a year working for the federal government, but
  the tax resisters have told the government, "I quit." More on this
  anomaly later."

* April 18, 1980 "Biggest Tax Swindle of Them All" headed a letter
  column in the Times responding to Conine. Six missives were
  printed, all critical of Conine's defense of taxation, though two
  supported taxation by offering an alternative, the Value-Added Tax
  or VAT. Two others contained this one-word sentence in riposte to
  Conine: "Nonsense!" Another said, "Conine's inept suggestion that
  we hire more auditors is asinine!"

* August 18, 1980 "IRS Acts to Curb Rise in Tax Rebels," subtitled
  "Ranks Swell Despite Convictions," again does not mention any
  "Underground Economy." (Section l, Page 1)

* January 10, 1981 "Churches May Be Auctioned Off," subtitled "15
  Congregations Refusing to File State Tax Forms" expands the issue
  again from individuals and organized tax rebels to churches (Page
  30, Part I). "At least 15 California fundamentalist churches
  involved in a growing revolt against filing tax forms are in danger
  of having their properties auctioned off by the State." Yet again,
  no "underground economy" is mentioned.

Nor is this confined to the L.A. Times or U.S. News. Jack Anderson's
column of December 29, 1979, begins, "Honest American taxpayers are
being ripped off by an ever-growing economic "underground" of tax
chiselers whose unpaid taxes must be made up by the law-abiding
population. Estimates vary on the size of these tax guerrillas" annual
depredations, but some experts believe that their illicit tax-free
transactions make up as much as one-third of the total American
economy. Perhaps the most alarming feature of this shadowy army of
cheaters is that many of its recruits are not hardened underworld
figures, but respected and seemingly respectable citizens."

Columnist Sylvia Porter, "Your Money's Worth," devoted three columns
(November 10-12, 1980) to the "Invisible" Underground Economy." She
concludes apocalyptically, "Compliance must be the answer if we are to
avoid the danger that our whole system will fall apart."

Perhaps her vision is not unwarranted. Zodiac News Service, August 1,
1980, sent out the following story:

(ZNS) The Internal Revenue Service recently decided to run a check on
its own employees by auditing the personal income tax returns of 168
of its own auditors, who were selected at random.

The IRS reports that 110 of those audits are now complete, and that
exactly half of the Service's own auditors made serious errors in
their own personal returns. Of the 55 inaccurate returns, 13 overpaid
their taxes by an average of $129. The remaining 42, however,
underpaid Uncle Sam by an average of $720. This $720 figure,
incidentally, is more than double the public's average underpayment of
around $340.

The IRS was going to expand its audit of its own auditors, but has
since canceled that plan after the auditors labeled the scheme
"outrageous," and "very, very unfair."

And the "threat" is not limited even yet. Thomas Brom, for Pacific
News Service, November 28, 1980, in the article "America's Booming
"Outlaw" Economy--Jobs for Many, Protection For None," begins with
this dire warning as an "Editor's Note": "The "outlaw" or
"underground" economy, where cash pays the bill and the IRS is
shunned, is growing by leaps and bounds, according to recent
estimates. It has come to function as a kind of shadowy catch-all
survival system and unofficial welfare program for the growing legions
of unemployed. But while it offers survival for many, it provides
little welfare and no worker protection, and it represents a serious
threat to American unions, reports Thomas Brom, PNS economics editor."

Finally, nothing is a popular phenomenon if it's not reported in
People magazine.  So September 1979, page 30, a full-page photo of
the General Accounting Office's Richard Fogel, captioned "If the
government doesn't take action, the integrity of our whole tax system
could be threatened," is headlined "A New U.S. Study on Tax Evasion
Is Another Reason To Shout: I'm Mad As Hell And I'm Not Going To Take
It Anymore."

Something is going on here. What it does not seem to be is the "tax
rebellion" of the amateur constitutional lawyers. What it does seem
to be is highly successful and most irritating to the State, its
Establishment, and their defenders.

What The "Underground Economy" Is
---------------------------------
"Underground Economy" conjures up a vision of some subsociety internal
to the general society at large, with consciousness, structured
organization, and a subculture of customs, traditions, and perhaps
even art and literature. The picture of the underground shopping
center in J. Neil Schulman's Alongside Night (Crown, 1979) would fit.
But that's set in 2001 speculative fiction" and no one claims such
a subsociety exists today. Furthermore, Schulman's talking about the
Counter-Economy, something containing a lot more than tax evasion. So
what is the current "Underground Economy" and what is its relation to
the Counter-Economy, if any?

The U.S. News & World Report gives the broadest definition of the
above sources and the most examples: "In brief, the underground
economy involves all the economic activity carried on every day that,
for a variety of reasons, escapes tabulation by the nation's official
economic pulse takers--from moonlighting and roadside fruit-stands
sales to high-level corporate chicanery and multimillion-dollar
skimming operations at gambling casinos." So far, it is broad enough
to encompass the Counter-Economy. But then, U.S. News narrows it:
"This "work force" is dominated by the self-employed--from lawyers,
doctors, and accountants to shopkeepers and tradesmen--and by the
working poor. But it includes many from other slices of society, too
"those who, among other things, pad tax deductions or underreport
interest, dividend, rental, or royalty income."

Counter-Economics includes everyone. (See later chapters for a proof.)
That is, a countereconomic activity is any human action that takes
place without the approval of the State. And since laws cover almost
every human endeavour, often prohibiting both the action and its
corresponding inaction, everyone to at least some small degree must
bend or break laws simply to exist. U.S. News sees considerably fewer
people in its "Underground Economy." "In ways small and large, 15 to
20 million Americans probably are involved, says Allen R. Voss, who
supervised a study of the problem by the General Accounting Office. Of
these, as many as 4.5 million derive all their support from
subterranean income, according to Peter M. Gutmann, an economics
professor at City University of New York." In short, the "Underground
Economy" is the most hard-core committed sector of the tax-law
breakers of the Counter-Economy.

Who are the taxless? Several examples, from housecleaning widows to
housewife tailors to roadside vegetable-vending farmers are given.
This one may be archetypical: "A struggling 24year-old actress in New
York City holds down three jobs to make ends meet: She works as a
bartender, a job that pays her $30 to $35 a day, including tips; helps
out at her father's jewelry shop on Saturdays, and appears
occasionally in her own cabaret act at a Greenwich Village night spot.

> All her jobs are off the books. Her employers, in other words, don't
> withhold any taxes from her pay and don't contribute toward Social
> Security or unemployment insurance as they are required to do. "I'm
> completely underground," she says. "There are no records of anything
> I'm doing." She exhibits no guilt or repentance over her failure to
> account to the State for her action. One wistful note is struck by the
> housecleaner. "As I get older," she says, "I'm starting to think,
> maybe I should have had my people pay on Social Security for me. But
> this way I pay no taxes, no nothing.

While the "Underground Economy" concept is heavily weighted toward tax
evasion, the interconnectedness with other counter-economic activities
such as Social Security evasion, labor regulations avoidance, health
and safety inspection noncompliance, and illegal immigration is
obvious The "Underground Economy" as defined by the IRS, et al., at
most includes our actress and her employers. But remember, anyone who
deals with her and is aware of her illegal activities is an accessory
and co-conspirator. Thus, all her friends, relatives, co-workers and
probably many of her customers, fellow thespians, and even barflies
are involved in the Counter-Economy. This "ripple" effect is
characteristic of Counter-Economics; one need not belabor its effect
on the majesty and authority of the State, its agents, and
bureaucrats, on those even peripherally involved. '

Every non-statist job or enterprise is capable of some degree of
countereconomiz ing. Some industries seem to have a higher affinity
for CounterEconomics than ot hers. U.S. News delves into those
commercial sectors which, to maintain the metaphor, have a tendency to
"submerge." Leading the way is that heterogeneous set of employment
opportunities known as moonlighting. "A whole panoply of moonlighters
toils away in the underground economy. One such man, a young New York
musician earned $7,500--almost all of it in cash--by giving guitar
lessons last year. But he declared none of it on the joint return he
filed with his wife. He didn't list the income, he says, partly out of
need and partly out of anger. His parents paid high taxes for years,
he says, yet he was denied government loans and grants available to
others to help with his college expenses because his parents" income
was too high." The connection between anti-state resentment and
counter-economic motivation is indicative of the implicit
libertarianism of Counter-Economics; the fact that it remains
unfocused--currently--might well interest libertarian strategists.

"A moonlighter in Indiana works in a machine-tool shop during the week
and oversees a private trash-disposal facility on weekends, where he
takes in about $100 in unreported income each week." While hard-core
counter-economists are more common than expected (e.g. the actress and
musician above), most people are partially counter-economic.

"Millions who work at regular jobs but are not subject to withholding
taxes--teachers, taxi drivers, door-to-door salespeople, pollsters,
insurance agents, and real-estate brokers, among them--are accused by
officials of being a major element in the underground economy. Some 47
percent do not report their earnings, the IRS claims." Interestingly,
U.S. News fails to mention waitresses and waiters anywhere in their
article; a surprising omission considering the size of that Amazon
Army (largely female) with largely unreported tips.

How The Counter-Economic Taxless Do It
--------------------------------------
How does it work? Fundamentally, as the Internal Revenue Service
admits in its ironic way, the income tax is based on voluntary
compliance. Where the compliance occurs, it obscures over, is in the
information about, not the collection of, its plunder. To put it
simply and bluntly, you have to turn yourself in (or have someone you
trust do it for you) to get taxed. Breaking down the State's access to
information about its victims is a general principle of counter-
economic mechanics; the other method involves letting them know when
they are impotent to act--which does work in certain fields but is
hardly "underground." This then is the real meaning of "underground"
in this context--out of "sight" of the eyes of the State's informants
and enforcers. How does this work in day-to-day practice?

Nearly all the examples given use cash and complicity. Cash is
untraceable; in effect, even if the State suspects, as long as they
have the present legal system they cannot prove or convict. They need
records--and testimony. The complicity is, of course, bought outright
with a discount. (In a few rare cases, especially with artists,
artisans, and special drug smugglers, complicity may be purchased by
the uniqueness of the product; i.e., you can't get it except by
underground agreement.)

Another method, however, operates by the obverse method--no cash.
Says U.S. News, "Barter transactions are thought to be another sizable
source of untaxed income. A Flint, Michigan, attorney was given a $300
antique credenza by a local resident he represented in a child-support
matter. The attorney often swaps services with his clients but does
not report as income the value of the items he receives. "I don't feel
guilty about what I do," he says. "The government is ripping me off."
Again we see the anti-state resentment justifying illegality--and the
ripple effect in this one lawyer's "contamination" of a whole town
full of clients with countereconomic complicity.

"Another man, a self-employed commercial illustrator and copywriter in
Chicago who is fed up with high taxes, says he does little cash
business but a lot of bartering. He writes advertising copy for a
liquor store in exchange for alcoholic beverages he needs for
entertaining, and does illustrations for an ad agency in return for
typographical services. He figures that the bartering accounts for 5
to 10 percent of his business." Underground enterprise--like the
overground type--seems limited only by ingenuity. Of course, the
"overground economy" is also limited by the State's control and
regulations.

Oh, yes, how does this artist feel about his outlaw activities?
"These trades happen so frequently, on a low economic level, that I
can't keep track of how often I do it," he says. Hiding it from the
tax collector would have bothered him a couple of years ago. No
longer. "Now I think of it in terms of economic survival. Taxation has
become legalized theft." He sounds like an ideological libertarian .
Besides these two methods of keeping income "off the books" to keep it
from the tax men, another method is to manipulate the books
themselves. One group of retirees collect winnings at race tracks for
big-time bettors, then turn them over to their backers who avoid
high-bracket income levels. Expense accounts can and do absorb all
sorts of transactions to be kept off the personal income books.
"Skimming" is nearly universal in small storefront businesses, shops,
and taxis: keeping a portion of each day's take without recording it.
A jeweler interviewed by U.S. News does $10 million worth of business
a year, 25 to 30 percent of it in cold cash. "He says he thinks 10 to
20 percent of all the income generated "on the street" goes
unreported." Massive. And he sounds like Ayn Rand: "I started with
nothing and built up a business of millions. The government started
with billions, and they keep going in debt. They just waste the
money."

And finally, one can simply double the books, one for you and one for
the State: "A Houston barber keeps two sets of books, one for herself,
one for the IRS. Most business is in cash; she pockets about a third
of it, or $200 a week, without reporting it."

One last U.S. News example puts it all together. "A California
merchant who boasts that he hasn't paid 1 percent of income tax in
five years offers this how-to-do-it advice on skimming: "The most
important thing is consistency. If you skim, skim the same amount each
year. If you let one year go by without taking anything off and then
take 20 percent the next, you're going to get caught. "Even an IRS
audit doesn't mean the end of the world. You are usually notified in
advance. All you have to do is buy some new receipt books and make
them fit your figures. As long as the receipts are numbered
consecutively, and the figures jibe, you're O.K. In fact, the year I
cheated the government was the year I was audited. The upshot was the
inspector ended up congratulating me on what fine shape my records
were in. Cheating the government is so easy it's pitiful."

What Causes The "Underground Economy?"
--------------------------------------
The Counter-Economy exists because the State exists. Every
intervention by the State in the free market dislocates supply from
demand. Besides being the coercive curse that libertarians denounce,
each intervention creates an economic opportunity for an entrepreneur
to figure out how to supply demand that the State prohibits or
cheaper than the State allows.

In the special case of the taxless "Underground Economy," every tax
is a challenge. Let's take a look at New York City. Says U.S. News:
"New York City's black market in bootleg cigarettes, which by some
estimates accounts for up to half of all sales of the tobacco product
in the city now, could be denying the city and the State "hundreds of
millions of dollars a year" in revenue, says David Durk, assistant
commissioner of enforcement for the city's Department of Finance. The
reason for the burgeoning bootleg market: The high excise tax, which
totals 23 cents a pack."

Unique? Read on. "New York City's relatively high sales tax of 8
percent poses another problem. It is common for merchants to skim 20
percent of it, says economist Gutmann." And only in New York? "A
sales-tax expert, John F. Due, an economics professor at the
University of Illinois, says that from 3 to 5 percent of total sales
taxes due nationwide, or as much as 2 billion a year, escapes
collection."

A second U.S. News article, directly following, "Cheating on Taxes" A
Worldwide Pursuit," documents similar figures and adjusted for local
cultural practices, around the world. Schwarzarbeit in Germany,
travail noir in France, "fiddlers" in Britain, and morocho in
Argentina are terms coined to deal with black labor and black money.
"Italy's underground economy is growing so rapidly that the
government now includes it in economic planning." Argentine
government officials "estimate that up to 40 percent of all business
is involved."

Japan, Sweden, and Canada are covered, and "Economists in Thailand
throw up their hands when asked to estimate what uncollected taxes
are costing the government. "Who knows?" is the response given most
often." We'll look at the International Counter-Economy in detail
next chapter.

Should There Be An "Underground Economy?": Critics and Defenders
----------------------------------------------------------------
There is a Counter-Economy, in particular the sector involved with tax
evasion, and it's vast. It was "discovered" and named by this author,
speaking to radical libertarians, in 1974. Now the "underground" part,
at least, has been discovered by others and they do not approve. While
leaving the theory and justification to the end as promised, I think I
may whet the reader's appetite by previewing the debate between
libertarians and the Establishment writers on just the tax question.
Both camps agree that a perfect society would not have a
Counter-Economy, or any part thereof. What they disagree on is that
the libertarians see the Counter Economy as that perfect society in
embryo struggling to hatch; the opposition sees it as a blight and
unsightly tumor on the more-or-less acceptable body politic.

Welfare state defenders and planners don't like it. Says U.S. News:
"governmental programs are upset by the underground economy. Because
of unregulated jobs and income, the readings of government
statisticians--whose numbers can trigger automatic cost-of-living
raises or pump billions of dollars of fiscal adrenalin into the
economy when unemployment goes up--may be out of phase with what
really is happening. Unemployment, for example, actually may be almost
a half percentage point lower than the official figures indicate, says
an economist who has studied it, and the number of poverty-stricken
somewhat fewer." Libertarians would point out that perhaps the
Counter-Economy could absorb all the unemployed, especially when the
State breaks down in runaway inflation or catastrophic depression "
which result from the State's own controls.

Ernest Conine of the L.A. Times puts it this way: "In a perfect world,
all inequalities would disappear. Pending that unlikely day, however,
the complaints that all of us have about government hardly add up to a
valid excuse for cheating on taxes." Perhaps not, but what does Conine
think is wrong with it? "After all, when a house painter or a lawyer
reports only half his income, he isn't hurting David Rockefeller, the
Pentagon, Jimmy Carter, the U.S. Supreme Court or the big-time tax
evader." Why some or all of them should be hurt would be very
enlightening, if explained by an editor of the Los Angeles Times.
Alas, no: such analysis is given. And, on top of that, Conine is
factually wrong, 180°? out of whack. Since all those except the
"big-time tax evader" live off the State's taxes, there's that much
less a pie for them to divide. If all the economy went "underground,"
all the aforementioned would be bankrupt.

Who is the counter-economist hurting, according to Conine? "He is
hurting the guy down the street who works for a straight paycheck and
has no way of avoiding taxes, even if he wanted to, and thus must pay
both his share of the tax burden and that of the tax cheat as well."
Again Conine is wrong; if his economic theory holds, then if everyone
avoided taxes but one unlucky stiff, he or she would support the
entire tax burden. There is some "elasticity" to tax "supply" but
nothing on the order of 20-30% of the economy. The State is simply
collecting fewer taxes--period.

Conine blames "tax cheating" for higher taxes and concludes, "Somehow,
though, this is a case where too many people instinctively side not
with the cops but with the robbers... Most of us seem determined to go
right on looking on small-bore tax cheats with bemused tolerance "
even playing their game with off-the-books cash payments for services
rendered--in blithe disregard of the fact that they are placing their
fair share of the tax burden on our shoulders." ' Further in the book,
the "guy with the straight paycheck" will find more ways, if he hasn't
picked up several already, on how he can join the taxless. One chapter
will deal with Brown of Pacific News Service's fear of illegal alien
exploitation and lack of security, the large literature already extant
on free-market economics answers Sylvia Porter's fears of the collapse
of society, and the collapse of the State in society, that is, how the
Counter-Economy can expand to overwhelm the State's economy and create
a free society, and sell it to an oppressed, angry people already
fighting back to the limits of their understanding, will be dealt with
in the final chapter of the book.

What a fair share of the tax burden, if any, is takes us into the
theory, which is being put off. Suffice it to say here that if Conine
believes a relatively free society of people have the right to choose
their own taxation level, with or without representation, then he
should welcome those who are effectively making that choice. But it's
not only the relatively free people in the United States who are able
to make that choice via Counter-Economics. Now we shall turn to the
rest of the world.

5. International Counter-Economics
----------------------------------
Having established the existence of at least the taxless part of
the CounterEcon omy and at least in this continent, one has two
directions to expand the concept--other fields in this continent
and Counter-Economics abroad. There is also the combination of the
two--the countereconomy across the borders of this continent and
those of others.

In a free market, there are no borders. There are geography, space
to be crossed with goods and information, and obstacles to be
overcome all affecting the price.

When the State imposes imaginary boundaries and real enforcers such
as customs inspectors, immigration officers, and treasury agents "
not to mention armies and navies--the market splits. The white
market sees obstacles; the black market sees opportunities. To
counter-economists, a border is just another obstacle to moving
goods and services to be dealt with efficiently and competitively.

Some of the goods smuggled include people, money, and things--the
last known as contraband and can be anything from jeans to cocaine.
Another field of border-avoiding commerce is transporting
information. That can range from "pirate broadcasting" to
industrial and political espionage. There is even a tactic of
moving legally acceptable goods across borders to take advantage of
different tax breaks and export incentives.

This may be the best time to point out that there are places with
virtually no counter-economy (though counter-economists from other
areas may be operating here only): space, the high seas, and the
free ports. The rapid militarization and nationalization of the
first two is generating Counter-Economics and will be covered
later. The third category describes areas where the States of the
world have contracts (treaty) to refrain from control--though that
is revocable at any time, as Danzig and Tangiers found out. Even
Hong Kong and Singapore were briefly occupied during World War II.
One can draw what lessons one wishes from these places which have
no economic intervention and no countereconomy, and standards of
living far higher than their surroundings.

Almost every major country, by the way, has free-trade zones at
airports and seaports to allow transfer of goods from international
carrier to international carrier. New York City has one on Staten
Island. Prominent pedophiliac Roman Polanski, subject to arrest on
sight in the United States, landed at Los Angeles International and
took off again en route from France to Tahiti. He was not molested,
though he wisely remained in the plane throughout. Such areas of
free trade are hardly the result of State benevolence or laxity;
should a State eliminate such boons to trade, another State in the
"international anarchy" will offer the service and increase the
share of business. What about the "underground economy" of tax
evasion? Does that exist abroad? In many places, taxation is worse
than in the United States, so expecting the more Counter-Economics
the more the intervention, we should find plenty. The International
"Underground Economy"

The term Schwarzarbeit in West Germany and travail noir in France
both mean "black labor." "Whatever this hidden market is called, in
Europe it means that workers evade income tax, social security, and
often other taxes by failing to report their full earnings to the
government. Employers dodge social-welfare taxes, and, in some
countries, value-added levies. They also avoid paying higher wages
to regular employees for overtime." How many are involved? "Experts
at the International Labor Office in Geneva estimate that in Europe
5 percent or more of the total labor force may be involved in the
hidden economies. That means 7 to 8 million workers!"1

Outside of the Warsaw Pact, the most socialist--statist--country
is usually considered to be Sweden. "Sweden, the most heavily taxed
nation in Europe, has a hidden economy that is estimated to total
at least 10 percent of the national output--and to cost the
government taxes amounting to 15 percent of the budget." Labor
barter seems to be the main method, and the Swedish State is trying
mightily to suppress counter-economic labor "and tighten its tax
controls, already among the toughest in Europe. But authorities
seem to be fighting a losing battle..."2

> Italy's underground economy is growing so rapidly that the
> government now includes it in economic planning. Official estimates
> put income from hidden labor at around 10 percent of the gross
> national product--or about 24 billion dollars--in 1978. But a
> recent study said it is much greater, as high as 43 billion
> dollars in 1979.

Counter-economic labor marketing benefits both employer and
employee, cutting across class lines even in class-obsessed Europe.
Why? The black laborers of Italy "usually receive lower wages, put
in longer hours and have no socialsecuri ty or other fringe
benefits. But they pay no taxes."3 Those who wish to argue that
labor wants to avoid risk and trusts the government to protect it
from exploiting entrepreneurs, will have to deal with this
inconvenient existence: "More than six million workers, one-third
of Italy's labor force. are secretly employed." And for the Italian
employers, Counter-Economics "lowers their labor costs, gives them
a flexible work force and enables them to require employees to work
overtime when needed."4

Has only Italian labor acquired counter-economic consciousness?
"The owner of a clothing factory--staffed with illegal workers--may
sell his product to a middleman. The middleman, operating from
a delivery van, sells to a retailer. The retailer does not register
the purchase and thus can sell at a discount because he has not
paid the value-added tax."5 Note how layers of economic activity
form between the initial producer and the final consumer and these
layers form counter-economic steps in the "capital pyramid."6 No
step of production seems safe--for the statist.

"Yet, why is it that you seldom hear a peep about deregulation
under the blue skies of the sunny Mediterranean? ... The
realization dawns first on the autostrada. On roads marked 100
km/h, the only vehicle observing the speed limit is a lone Morris
Minor with British licence plates and a flat tire. On the zebra
pedestrian crossings in the piazzas you can see bicycles, motor
scooters and oxcarts--but no pedestrians. They are darting in and
out of the lanes marked "Buses Only," where even the oldest
Italians do not remember ever having seen a bus. Currency
regulations are strict but stores or toll booths accept anything
from dollars to Swiss francs and then give you change in gaily
wrapped bubble gum to compensate for a shortage in minted coin. A
doorman at the Ciritti Palace Hotel in Venice explains why water
taxis are charging three times the official tariff. He proudly
points to the computerized income tax forms the government in Rome
sends everybody. "The Americans showed our government how to do
it," he says."

Our observer, Ms. Amiel, sees the answer quite counter-
economically. "Suddenly the coin, or perhaps the bubble gum, drops.
Of course there is little talk about deregulation in Italy. Why
fight the paper tiger? The marvelous Mediterranean spirit, the
Italian genius, the wise, vital flow of brio, has solved the
problem without it. The Italians have cut the Gordian knot.

> They can have all the rules and regulations in the world; they
> will simply not observe them. The Italians have raised civil
> disobedience to a fine, subtle art. They have made regulations what
> most of them deserve to be--the dead letters of someone else's
> desire. 7

France has less tax oppression and the travail noir is estimated at
"only" 800,000 workers and five billion dollars, though that is
undoubtedly an underestimate. "Most hidden work is in plumbing,
painting, roofing, electrical installation, and other home repairs.
But dressmaking, auto and truck repairs, hairdressing, and
carpentry are also popular." So far no one had checked out data
processing there.

The ranks of the government itself are not immune. "Even such civil
servants as policemen moonlight at night or on weekends." More on
that in a bit, How about welfare cases? "Some persons who draw high
unemployment benefits prefer fulltime underground jobs to working
legally."8

Union statism adds incentive to West German Counter-Economics.
where lower taxes might otherwise depress motivation. (Artificially
high wage rates create a barrier to entry leaving jobs undone.)
Schwarzarbeiters combat the artificially high wage rates. "Plumbers
and bricklayers, who charge $17 to $25 an hour if employed openly
through a contractor, can be hired secretly for half that price."9

It's impossible to assign market value without recording
transactions, but German officials estimate twenty-five billion
dollars of untaxed work a year costing their State four billion in
taxes--which assumes it would even have been performed if taxed.
Insidiously and erroneously, "a state labor ministry says 230,000
West Germans could find work if Schwarzarbeit were eliminated." The
millions of black workers who would be unemployed are of no
consequence to the labor ministry.10

Fines of $380,000 were imposed with one worker in Stuttgart fined
$5,000 and taxed $112,000 for earning $250,000 in seven years. "But
fines do not seem to help."11

> In Great Britain these underground workers are called "fiddlers."
> It is estimated that one of every eight Britons earns a minimum of
> $2,200 a year by moonlighting and does not pay a penny of tax on
> the unofficial income. By one reckoning, the black economy accounts
> for close to 8% of Britain's gross national product."12 Those who
> fear for the stifling of British incentive under social democracy
> may take heart. The British are counter-economizing with the same
> techniques as the American and European, but there are a few unique
> cases. "One fiddle that is hard to bring under control is taking
> place on the oil rigs in the North Sea. Many British companies and
> subsidiaries of foreign firms cooperate with the government's
> payas-you earn plan and deduct taxes from employees" pay, But some
> drillers refuse to do so... up to now, about 8,000 workers have
> paid no taxes on earnings of about 90 million dollars."13 Earlier,
> cross-border Counter-Economics for purposes of tax evasion was
> mentioned. Some spectacular cases of Swedish movie stars and
> English rock stars are well known. Here's the testimony of a
> lumpenbourgeoisie: "If I worked at home, I might make as much as
> $400 a week, out of which I'd have to pay rent, buy food--and pay
> taxes, But, doing the same work in Germany or Holland, I get $700 a
> week plus meals and a place to live. I take my money in cash and
> don't pay taxes to anybody. 14

On to the Third World: Argentina calls it black money "morocho"
that is tax free, and estimates 40% of all business is involved.15
"The head of a constructi on company sums up the situation this
way: "You won't have a hammer swinging anywhere in this country
unless you are prepared to pay black money." And in the higher
classes, "A banker in Buenos Aires reports: "The apartment next to
ours was sold a few weeks ago for $360,000--all in cash and all
black money. There were no taxes, no real estate commission, no
anything except $360,000 in cash."16

While tax evasion is relatively minor in Japan (so far),
Counter-Economics enters where the monopolist State education
system creates artificial "barriers to entry" (the economist term
which one will be seeing a lot of here). To enter the more
prestigious universities requires the payment of "backdoor"
admission fees. "Parents have paid the yen equivalent of from
$4,600 to $460,000 to school officials in order to get their
children into their chosen university."17 Thailand, near the
black-market haven of Burma, makes up for Japan's lawabiding. "The
taxpolicy division of the Finance Ministry estimates that less than
10% of the country's 19-millionmember labor force files tax
returns."18 That's 90% who do not file tax returns. Somebody must
be watching those 10% like hawks. Just to make sure the incentive
is to play and not fink, "an auto salesman offers a prospective
customer a "friendship price" of from 10 to 30 percent off the list
price if the buyer pays in cash and agrees to forget any paper work
that could be used by tax collectors to trace the sale."19

Returning to Italy for a bit, one finds a counter-economic effect
even more threatening to the State. It seems the majority of that
six million (1979 estimate20) or two to four million (1977
estimate2l) are the government workers themselves! Working from 8
A.M. to 1:30 P.M., the Roman bureaucrats are well positioned for
afternoon second jobs.22

> Yes, I know I'm taking up a job someone else needs," says a
> bureaucrat in the Italian Finance Ministry who supplements his $400
> a month government salary by working in a real estate office in the
> afternoons and by skipping his government job in the mornings if a
> big deal comes up. "But I've got to look out for my wife and three
> children. 23

The rise of British CB and smuggling of various goods such as
drugs, guns, and people will be taken up in their appropriate
chapters. Still, remember that the business generated is tax-free:
"The Coast Guard estimates that six to eight billion dollars in
illicit weed was successfully smuggled by ship into the U.S. last
year."24

That's just one product and one method of shipping. And yet, "you
ain't seen nothing yet." Let us turn now to the Eastern bloc, the
Warsaw Pact and other nations laboring under Marxism, Leninism, and
variants thereof.

Counter-Economics Under Communism
---------------------------------
Argentina, ruled mostly by a military dictatorship, seems to have a
thriving counter-economy as we have seen. Is there a substantive
difference between "authoritarian" regimes of right-wing statism
and "totalitarian" regimes of left wing statism--at least in this
regard? A drug haven like Colombia or Bolivia, riddled with
corruption, may have a booming counter-economy but what about Third
World countries cleaned up and reformed by Marxist-Leninist
governments? Perhaps the most important question in this area is,
can the power of the State get so great that the counter-economy,
rather than growing in response, gets crushed?

Viet Nam could answer all these questions. After all, were there
not dire predictions of catastrophe, nay, apocalypse, when the
free-enterprise Americans were driven out by the Communist North
Vietnamese? Would anyone making the distinction between
authoritarian and totalitarian states deny post-1973 Viet Nam is
the latter? Is not Viet Nam both "Third World" and "Second World?"

Back in July of 1976, this author noticed a report on Viet Nam and
wrote it up as follows; it is printed in its entirety.

The "corruption" which so tainted the Thieu-Ky regime and the U. S.
sergeants has infected the Lao Dong (Communist Party) cadre in
"liberated" Saigon, according to reporter Patrice de Beer in a
two-part article in the weekly English edition of Le Monde, the
famous French daily.

"Not a dollar has dropped into Saigon's empty coffers since April
30, 1973, not a bag of American rice has come to alleviate the crop
shortfalls," reports Beer. Elsewhere, he describes the scene in the
present Saigon.

> Yet the city streets are crowded with cars and motorized bikes.
> Swarms of prostitutes ply their trade in the old To Do street, and
> the thieves" market offers piles of stereo sets, fans, and other
> American goods brought out from heaven knows where. I was even held
> up for a quarter of an hour in a traffic jam while trying to drive
> out of the city.

Beer goes on to describe the problem of the new society "Some
members of the new ruling class (a very tiny fraction, I was
assured, but quite conspicuous) are following in the footsteps of
their predecessors, providing the prostitutes with a new clientele,
especially in the centrally situated Miramar Hotel, occupied by
cadres. Waiters in the posh restaurants complain that the "bodoi"
(soldiers of the People's Army) are not good customers because they
don't have any money.

> But the "canbos" (cadres) are good customers. They are rich and
> give fat tips.

Now Beer describes what a libertarian would call a full-blown
counter-economy: "Exit visas are rumoured to be going for hundreds
of dollars, gasoline intended for arms and government use finds its
way into the black market, and civil servants or persons posing as
civil servants are alleged to solicit bribes from families for
freeing a husband or brother sent to a re-education center. Some of
the leaders live in requisitioned villas, and have cars, buy
furniture, television sets, and let themselves be corrupted by the
old bourgeoisie, which knows in the long run its fate is sealed,
and is not therefore inclined to be optimistic. Those who have
decided to stay are spending everything they have. This accounts
for the rush on expensive restaurants and a frenzied buying spree,
which is fueling an inflationary flare-up."

Students of Austrian economics will smile at Patrice de Beer's
reversal of cause and effect on his inflation analysis, and note
the classic description of a "flight into real goods."

Beer goes on to report the vicious gossip about the "bodoi" and
"canbos", the investigation by the Lao Dong of corruptions, the
hostility between Northerners and Southerners.

> As for the Northerners, they are dazed at the sight of the South's
> apparent prosperity, for they have been told their compatriots were
> short of everything. "The demobilisation has just begun and a
> number of "bodoi" have been assigned jobs in the economy. They are
> still being asked to make sacrifices to help their "brothers in the
> South," though in their eyes the South Vietnamese don't seem so
> badly off.

Being a Communist country, Viet Nam naturally has a Five-Year Plan.
But it sounds strangely like something from Ford or Carter: "The
south's so called policy of "five economic sectors"--state,
co-operative, mixed, capitalist, and private--should continue for
some time more to come. As Nguyen Huu Tho pointed out, the state
must "use capitalism's qualities and curb its negative tendencies."
... He added it was necessary to be "flexible, very realistic, and
be able at times to fall back a little." Principles couldn't be
bent any further in a situation where officially the country is
headed towards a socialist type of economy. It ought to be
mentioned that even in the North there is a lively private sector
nicknamed the "under-the-counter sector."25

That was 1976. Surely, that was too close to the end of the war
with the United States. Things must have changed, say, four years
later? "The economy is strictly black market. Privately run shops
remain open, but they are musty places full of cheap, imitation
lacquer dishes and mind-numbing political treatises, all at
outrageous prices. "There also are government shops where civil
servants and government enterprise employees buy their monthly food
rations. "A laborer is entitled to 13 kilograms of rice a month "
just under one pound a day--and the scale goes downward to the
office clerk, who is allotted less than one-quarter pound a day.

"There is rarely enough rice to go around. There also are limp
vegetables and the occasional piece of pork or beef." A miserable
scene is observed after seven years of communism, as predicted...
except for one thing. "The black market is called Cho Troi or "sky
market" because goods are displayed outdoors. Here, in the side
streets and the central marketplace with its satellites throughout
the city, is the collective economy of Ho Chi Minh City. "Prices
are fearsome, but the market is the only place such exotic items as
razor blades, soap that makes suds, fresh food, tape cassettes, and
decent cloth are available.

"Gasoline at more than $15 a gallon may be the most expensive in
the world. That tiny razor blade is $5 and the highly prized Lux
brand American toilet soap $11.

> In a place where official salaries average less than $100 a month,
> such luxuries as electricity and a telephone have become virtual
> objects of curiosity. "The black market thrives on the official
> "intershop," which is open to all foreigners and accepts major
> currencies of the world--but not the Vietnamese dong, worth 43
> cents at the official rate. 26

Perhaps seven years after the Revolution is not enough. How about
the People's Republic of China, twenty-one years after its
Revolution? "In a dragnet of Shanghai, China's largest metropolis,
the police have arrested nearly 200 black marketeers in recent
weeks and confiscated valuables ranging from television sets and
tape cassettes to marriage manuals and "pornographic materials,"
the Shanghai newspaper Wen Hui Bao reported."27

How does one conduct Counter-Economics in such incredibly crowded
conditions? "Privacy is nonexistent here; so even an illicit
business must be conducted in the open, but the black marketeers
are more subtle than most. On bustling Zhongshan Road the other
day, a huge crowd of youths surrounded an older man who was playing
a brand new Sanyo tape recorder. They listened awhile, then
disappeared into a side street cafe. One young man returned, the
tape recorder tucked under his arm, It had obviously changed hands
in the cafe. "Another favorite device is for people hawking
sunglasses from abroad to keep the foreign sticker on one lens,
attesting to the place of origin. Foreign sunglasses, the latest
status symbol for China's young, sell on the black market at
tremendous markups, typically $25 for a pair that costs $5 in Hong
Kong."28 The Chinese Counter-Economy is limited neither in scope
nor in geography. "High-quality consumers goods, available here
only in small quantities and in government control, account for
most of the illicit trade, but there are exotic items, too. Black
marketeers have been nabbed here for selling a Chineselanguage sex
manual, A Guide to a Happy Marriage. And heroin is smuggled into
Guangdong province from Hong Kong.

> Black market activities thrive in this pace-setting city, where
> 11.6 million people seem a bit more prosperous and decidedly more
> stylish than most Chinese, but the more staid places are not
> immune. "In a so-far unsuccessful drive to stop illegal trading in
> Beijing, perhaps China's most tightly controlled city, capital
> police have repeatedly raided the black market on Dongdon Street.
> Yet on many Sunday afternoons, young speculators still gather in
> the same spot, less than a mile from the Public Security Ministry,
> to swap goods. 29

Nevertheless, all regions of China are not equal, counter-
economically. (All regions of, say, the U.S., are not equal
economically, either. ) The areas bordering on "capitalist"
countries seem, naturally enough, to have a better counter-economy,
at least in terms of availability of goods. "Because it lies next
door to the British colony of Hong Kong, Guangdong province in
South China appears to be the entry point for black market goods.
It also boasts what Chinese sources believe to be China's largest
black market, in Fatshan, a 20-minute bus ride outside Guangzhou.

> Fatshan is so well-stacked with watches, radios, tape recorders,
> calculators, television sets, and other luxuries that it is a
> magnet for people from all over China.
> 
> Even official purchasing agents from rural communes, under orders
> to buy scarce goods for collective use, turn to Fatshan when
> supplies at the government stores are depleted. 30

One would probably, at this point, expect the area close to the
Republic of China on Taiwan to be riddled with marketeering.
"Quanzhou, which lies on the coast of Fujian province opposite the
Nationalist-held island of Taiwan, is dotted with vendors selling
Dunhill, Viceroy, and other Western cigarettes for 65 cents to
$1.30 a pack. Squatting on the dusty roads, they display their
wares openly, but fold up shop and hurry off when approached by
cameras.

> Other sidewalk stalls display tapes recorded by Teresa Teng, a
> Taiwan torch singer whose romantic ballads are hits throughout
> China though she has never set foot on the mainland. Like the other
> merchandise, the tapes were smuggled in from Hong Kong, one vendor
> acknowledged. 31

Smuggling will be covered in a chapter coming soon but there is one
thing we ought to check on. After all, there is far more repression
of it by the anti-market Communists than the freedomloving
Nationalists, right? "Although arrests have been made on both
sides, the Nationalists appear to be far more concerned than the
Beijing government about stopping the trade. A special
investigation force was organized last month in Taipei to probe the
smuggling rings, a government spokesman said, and further arrests
are anticipated. Under Taiwan's strict martial law trading with
"the enemy," the Communists, is a traitorous act punishable by long
prison sentences."32

If there is any place which might have the free market utterly
stamped out, it would have to be Cambodia, after Pol Pot and the
additional devastations of the war driving him out.

"The black market stretches from Bangkok, Thailand's capital, to Ho
Chi Minh City, formerly Saigon, in southern Vietnam. Its hub is
this dirty town of war-gutted houses and tin-roofed shacks swollen
by transients from almost every province in the country.

"Sisophon is about 30 miles from the frontier, where Thai merchants
have set up open air supermarkets to which the Cambodians flock
despite occasional robbers and fighting en route and guerrillas who
take a cut of the trade."33 Can nothing stop the Counter-Economy
from its activity? Nope. "It all starts with gold exchanged at the
border for Thai currency, the baht. The Cambodian trafficker uses
the baht to make his purchases, which are then resold here, usually
for gold again. But this is only the small loop of a seemingly
haphazard, but in fact highly effective, distribution system.

"Armies of bicyclists, averaging 30 miles a day, set out from here
along the country's major roads, especially routes 5 and 6 to Phnom
Penh, the capital. Bulging sacks and boxes are lashed to the
bicycle seats, and bolts of cloth sometimes dangle and flap behind
as the dealer pushes the bike along. "Some travel between their
homes and the border; others drop off their goods at the "free
markets" which thrive in almost all the towns. Bike repair shops
and refreshment stands dot the roadsides for benefit of the traders
who also move on foot, ox-carts, motorcycles, military and civilian
trucks, and the train from Phnom Penh to Battambang, 25 miles east
of the frontier."34

We all know of the lack of production in Democratic Kampuchea, or
is it the government's lack rather than the people of Cambodia?
"The 14-month-old government has been able to give little else but
rice from foreign donors to the general population, and has
difficulties distributing it. So most, including most government
officials, must shop on the free market where medicines, watches,
clothes, cigarettes, and even Japanese-made radio-cassette players
and motorcycles are available."35

No starvation in Phnom Penh, evacuated by Pol Pot and reduced to
basic, primitive communism? "At Phnom Penh's bustling old market
one can, thanks to unbridled free enterprise, sit down to a good
roast duck and vegetables, canned Australian or Japanese beer, and
international-aid rice that has seeped into the system."36

Of course there was privation in Cambodia and many people died. But
the Counter-Economy survived and burgeoned. And the
Counter-Economy, let one never forget. is human action--that is,
humans acting. Some in Cambodia retain their incentive and produce
against the worst threats a government can issue and in the face of
all the examples of the death threats carried out. They are those
greedy, heartless, cowardly, profit-gouging,
couldn't-care-for-their-fellow-man speculative enterprisers--who,
by all accounts, alone keep Cambodia from total starvation imposed
by the people-loving Communists of Pol Pot and his equally
Communist opponent, Heng Samrin.

Perhaps the final irony is that not only does right-wing Thailand's
market supply the Cambodian Counter-Economy, but also Samrin's
ally's Counter-Economy--Viet Nam itself! "Although most of the
trade is with Thailand, there is also a sizeable two-way commerce
with Viet Nam. Consumer goods such as tea, soap, fruit, and bicycle
parts make their way to Cambodia. But the Vietnamese, sometimes
coming by truck to deliver aid or supplies for their forces, also
haul back Thai goods which they purchase from the Cambodians with
gold."37

Counter-Economics In The Second World
-------------------------------------
There's one last possibility one must exclude before concluding
that the Counter Economy cannot be suppressed but rather will
thrive under even greater statism. Perhaps all Asiatic or South
American (Cuban) Communist states are too new, too Oriental (by
which is usually meant prone to corruption) or Latin, or just too
weak to stand up to the mighty wealth of world capitalism. If
anywhere answers these objections, it is the nations of the Warsaw
Pact--the Eastern bloc, where the Union of Soviet Socialist
Republics holds far more sway in the name of Marx and Lenin than
does capitalist NATO and its running-dog lackeys. Poland is
considered anomalous because of the rise of Solidarity, so it will
be accepted as a poor example for our proof. Solidarity's rise,
however, must then be credited to the counter-economic case since
it organized and struck in defiance of all Polish laws. In fact,
most unions even in the United States began counter economically.
(What they turned into and why is left for later.)

In 1976, Poland experienced a mass upheaval which subsided until
Solidarity's rise. "The prime minister of Poland ordered price
increases of staples, food, clothes, etc., in the state-owned
stores. Immediately, demonstrations of consumers hit the streets,
similar to those which toppled First Secretary Gomulk a and brought
in present dictator Edward Gierek. Within 24 hours, Gierek's prime
minister suspended his own orders.

"One factor not mentioned in most press coverage was that these
same goods were available to some extent in a number of private
stores allowed and in the widespread black market. The Guardian
noted that the counter-economic price was higher than the state
price even after the official price increase, yet busi ness is
brisk."38

So how free is the stable Eastern bloc from Counter-Economics?
"Romanians, unlike Poles, are not officially allowed to possess
foreign currency, but this does not stop the inevitable money
changers from accosting foreigners on the streets. The black market
rate has rocketed since the Polish crisis began and is now five
times the official rate, or more, the most coveted currency in
Romania is a packet of foreign cigarettes (preferably Kents). In a
practice that constitutes the thin edge of the wedge of bribery and
corruption--an integral part of East European life--a packet of
cigarettes is slipped to the head waiter, and food and drink, which
were off the menu five minutes before, miraculously reappear. A
foreign businessman, who lives in Romania but drives a
foreign-registered car, is stopped by the police. A packet of
cigarettes, and documents that were suspect a moment before are
suddenly in order. Those packets of cigarettes change hands again
for under-the-counter food supplies for quality clothing, for house
repairs. And they oil the wheels of bureaucracy."39

Actually, much of the Counter-Economy of the East works like that
of Western Europe described earlier: "The system involves second
and third jobs, many performed for Western currency, which in turn
may be used to buy luxuries. In Hungary, Poland, and
Czechoslovakia, the second economy has grown so dominant that many
workers have come to devote more of their time and energy to that
sector than to their regular jobs.

"Construction workers in Czechoslovakia and Hungary are rarely
found on their regular jobs past the noontime lunch break. They are
off on their second or third jobs."40

Want to buy a car in Hungary but the State says no? "A housekeeper
in Budapest hotel told how, despite recent police crackdowns, she
was still able to order a new-model Soviet-built Lada automobile
from a local underground supplier, delivery in one month, for a
price 50 percent higher than the official price, cash in full on
delivery.

"Her supplier, to whom she cautiously introduced a Western
correspondent, said that the system operated with the connivance of
official dealers. They find customers who have been on a waiting
list for two or three years, but who are willing, for a price, to
give up their new car and begin the wait again."41 Some Eastern
counter-economists seem to have it better than "Free World"
workers, beating inflation. "When consumer prices rose 50 percent
or more in Hungary this summer, a carpenter in a tractor factory
said he could easily cope. His salary went up less than 10 percent,
but his fees for fine cabinet work he produces nights and weekends
doubled."42

Hungarians have their entrepreneurial laborers, their travail noir
and schwarzarbeiters. "Then there are the "sparrows," a term used
in Hungary for the highly skilled workers who flit from job to job,
increasing their wages by steady increments as demand shifts from
one enterprise to another."43 And in competitive education,
depending on the Counter-Economy, the Easterners may well be ahead
of the West. "In Poland it has taken on a new dimension, with
"flying high schools" spreading forbidden subjects. These range
from the rule of terror by Poland's Stalinist-era leader, Boleslaw
Bierat, to the economics of Milton Friedman and Paul A.
Samuelson."44 As always, we ask how it works.


"While such lectures may reach only a few thousand of Poland's 100,000 or
more university students, the influence of these ideas is much wider. Several
young men and women were taping a lecture by an underground historian, Adam
Michnik, held at a blacked-out suburban Warsaw apartment.
"My roommates are too scared to come," one of them said. "But they want to
hear it, so I tape it and they listen later."45

Why does and how can Mother Russia allow this rampant free enterprise in her
closely-guarded satellites? Or has the Counter-Economy beached the innermost
Iron Curtain as well? That story deserves a chapter unto itself.

Footnotes:
1. The underground economy: How 20 million Americans cheat Uncle Sam
   out of billions in taxes. (1979, October 22). U.S. News & World
   Report, p. 53.
2. Ibid.
3. Ibid.
4. Ibid.
5. Ibid.
6. Bohm-Bawerk, E. V. (1890) Capital and Interest. New York:
   Macmillan
7. Amiel, B. (1981, July 13). The subtle art of disobedience.
   Macleans 94(28), p.52.
8. U.S. News & World Report, op. cit., p. 53.
9. Ibid.
10. Ibid., p. 54.
11. Ibid.
12. Ibid.
13. Ibid.
14. Ibid.
15. Ibid.
16. Ibid.
17. Ibid.
18. Ibid.
19. Ibid.
20. Ibid.

99

21. Hoagland, J. (1977, September 18). European tide of "black
    labour." Manchester Guardian Weekly, Washington Post section.
22. Ibid.
23. Ibid.
24. The marijuana smuggling war is heating up on the high seas.
    (1981, January 5). Zodiac News Service.
25. Counter-economy in Viet Nam thrives. (1978, August 1). New
    Libertarian Weekly 3(34), pp. 1, 4.
26. Los Angeles Times, Wednesday, July 23, 1980, Part IA, page 5.
27. Mathews, L. (1980, June 7). Black marketeers, smugglers move in
    as China opens trade door to the world. Los Angeles Times, Part
    I, 6-7. (The headline is inaccurate as the article proves that
    there is a black market, not that it moved in from anywhere.)
28. Ibid.
29. Ibid.
30. Ibid.
31. Ibid.
32. Mathews, L. (n.d., c. 1980) China, Taiwan crack down on
    smugglers. Los Angeles Times.
33. Gray, D. D. (1980, April 13). Black market net funnels consumer
    goods to Cambodia. Santa Ana Register, p. D15.
34. Ibid.
35. Ibid.
36. Ibid.
37. Ibid.
38. Free market cracks red regimes. (1976, July 25). New Libertarian
    Weekly 3(33), p. 1.
39. Masterman, S., and Koene, A. (1981, August 24). A nation embarked
    on a perilous ride: Eerily reminiscent of Poland, growing tension
    threatens the oppressive Ceausescu regime. Macleans 94(34), p.11.
40. Second society grows in Europe. (1979, November 2). New York Times.
41. Ibid.
42. Ibid.
43. Ibid.
44. Ibid.
45. Ibid

100

3. Soviet Counter-Economics
---------------------------
A major premise of counter-economic theory is this: the more
government intervention in the economy, the larger the
Counter-Economy. Indeed, as we have moved from the "limited
governments" of North America to the "mixed economies" of the rest of
the world, counter-economic activity has certainly not receded.
Counter-Economics, moreover, predicts that totalitarian states should
conduct nearly all economic activity--in fact, all non-political and
even much political human action--outside the area sanctioned by the
State. So a positive test of our theory would be to check out a
totalitarian State in some detail and observe the degree of
counter-economic activity.

A minor qualification is in order, though we shall see it is scarcely
needed for our test. The economic theory which forms the most basic
level of our understanding predicts that no state can achieve
totalitarian control. In fact, Counter-Econom ics was discovered by
this author when I followed that idea to further conclusions.  But
all the so-called totalitarian states "Third Reich, Soviet Russia,
People's Republic of China, even Cambodia" actually allowed and
continue to allow some "private" property and some freedom of trade.

Nonetheless, most observers will grant there is considerably more
state intervention in, say, the Union of Soviet Socialist Republics
than in the United States. Therefore, there should be more
Counter-Economics, as well.

Let this point be belabored a little more. American conservatism
predicts that entrepreneurialism should be almost snuffed out under a
totalitarian communist state, except for a few Bible-smugglers.
Liberalism and democratic socialism might predict some resistance to
communism but that it would take the form of intellectual dissenters
and underground unions surfacing into "Charter 77" and "Solidarity"
organizations. Even what passes for libertarianism these days
predicts less, rather than more, "free market" activity in endarkened
U.S.S.R.  than in relatively enlightened U.S.A. So if
Counter-Economics contradicts all these ideologies" predictions--and
it does--one has a quick scientific decision in respect to their
respective validity.

101

What does reality say? We've seen a strong indication in our last
chapter looking at Eastern Europe, China, and Indo-China, but we need
a much longer, more detailed look at one such country. And if the
Counter-Economy is booming in the Soviet Union, the "hardest case"
for our theory, then where are the millionaires? Save for a corrupt
Commissar or two" even the Communist Party line will allow for such
imperfection" who has heard of Russian capitalist pig millionaires in
the 1980s?

Consider this: "A few weeks ago the Manchester Guardian Weekly
reported that several counter-economic millionaires were arrested in
their Black Sea resorts and dachas. Nearly all the government
officials in Armenia were also pulled in and broken by the Communist
Party and denounced by the press. The Armenian bureaucrats had been
involved in a major black and grey market "ring." (Armenia had
somewhat looser regulations and more private ownership allowed than
in Russia.)"1

Armenia, it may be argued, is not Russia proper, though a "Soviet
Socialist Republic." Then again, the Armenian counter-economists were
arrested. How about neighbouring Georgia?

"The parallel market represents a huge economic structure,
simultaneously independent from and associated with, the official
Soviet economy. This private sector penetrates every segment of
Soviet society. People active in the parallel market vary, from petty
speculators selling fashionable clothes to people of real influence
and wealth, such as the famous Georgian underground capitalist
Laziashvily, whose connections include quite a few top officials."2

What about Russia itself? "I particularly recall one such spirited
client, Abram Aizenberg--a massive man whose every movement
expressed self-assurance.  He was about 70, and he owned two
factories manufacturing hosiery and underwear that brought him an
annual income of several hundred thousand rubles. Over the years he
had amassed capital that the investigators estimated at three million
rubles."3

"After World War II, the three Glazenberg brothers were demobilized,
returned to Moscow, and soon realized that they could not bank on
their being veterans to

102

help them find a good job; they were Jews banned from all prominent
posts in the party and state apparatus. Even Jewish engineers had a
hard time finding employment in industry." While some may question
the ethnic purity of the entrepreneurs in question, this is Moscow
our Russian reporter is talking about.  "The Glazenberg brothers went
into underground business. Upon discharge from the army they each
received the large sum awarded to demobilized officers--about 5,000
in today's rubles--and acquired a single workshop in a factory to
produce artificial-leather shopping bags.

"They turned out to be talented businessmen, and in a few years their
company owned at least ten factories manufacturing artificial
leather, artificial-leather goods, and all sorts of synthetic fiber
products."

Of course, knowledge of their activities comes from their public
exposure, arrest and prosecution. "A firm operating on such a large
scale could not escape the notice of the Moscow DCMSP (Department for
Combatting Misappropriation of Socialist Property, the arm of the
Soviet police charged with fighting economic crimes). Indeed, the
DCMSP with its well developed network of secret informers, kept a
special dossier on the Glazenbergs" company."4

How did these Russian entrepreneurs last so long as to get successful
in the first place? "For some while, this in no way inhibited the
busy entrepreneurs--for they were paying off the top people in the
DCMSP, offering a monthly balm of between 5,000 and 10,000 rubles."
And how did they get caught? "One day, however, a lower DCMSP officer
leaked the story to a wellknown journalist at Izvestia, who began
sifting through the material on the brothers" company. In these
circumstances the DCMSP chiefs were powerless to save the Glazenbergs
" beyond warning them immediately of the danger impending, so they
might have time to secrete their money and valuables."

So how did the ruthless, inhuman, infamous, Soviet secret police deal
with these bloated capitalists? "Buffeted by the contrary pressures,
a top DCMSP official decided in Soviet Solomonic style that 1.) the
incriminating dossier would disappear from the DCMSP files and 2.)
the youngest Glazenberg brother, Lazar, would have to be sacrificed,
at least partly because of his playboy lifestyle

103

reflected in his two dozen suits and the wardrobe of his wife, a
ballerina in the Bolshoi theater."

One supposes, at this point, whether the proletarian masses would
revile or just ignore this exposed bourgeois. "On the first day of
Lazar's trial, the courtroom was packed with curious onlookers, dying
to glimpse a millionaire. What they saw was a tall man of about 40
with handsome features and a mane of completely gray hair. Lazar
Glazenberg walked, as prisoners are meant to walk, between two
escorts, with his hands folded behind his back hobbling along on the
artificial leg that replaced the limb he had lost in the war. But he
affably greeted friends and relations among the crowd."

Nonetheless, as all have agreed, the U.S.S.R. is a particularly
interventionist and repressive society. Our Horatio Algerov was
sentenced and shot, no? "Three months later he walked out of the
courtroom just as calmly, having heard his sentence: 15 years in
strict-regime camps." This is the home of the Stalin purge trials,
where the top communist officials--the new Russian aristocracy--are
regularly rounded up and shot.

A hardier entrepreneur might have survived and considered himself
ahead. Alas, Lazar Glazenberg had "served his country" one limb
defending the Motherland.  "It is almost impossible for a person with
one leg to survive 15 years in such a camp. He died seven years after
his trial."5 Before one reaches for the handkerchief over this
typically ironic Russian tragedy, remember the rest of th e family
got away with their wealth and obviously enough capital to keep
going.  So were the Glazenbergs an isolated example? Even if one
assumes most are not caught and not reported, there still are plenty
who were. That is, there are plenty more where they came from.

"Among other important underground family companies, the Bach clan
ranked high in Moscow, because of both the scale of its activities
and the amount of it s assets. The eldest member and head of the clan
was Isaak Bach."6

All the proletariat's representatives have to do is liquidate the
exploiting class to be free of them, says Marxism. "Here was a
businessman of the old generation:

104

before the Revolution, he had savored the joys of legal commerce in
his father's company. During the New Economic Policy after the
Revolution, when private enterprise was permitted for a short while,
his commercial abilities were fully developed. The notions and
ladies" underwear shops of Bach & Sons were then located on Moscow's
Kuznetsky Most street, amid the city's most expensive and fashionable
stores. But the New Economic Policy soon liquidated the company,
confiscating its merchandise and sending its head to the camps on the
Solovetsky Islands."

That's the end of Bach's incentives and capital, right? "When Bach
returned from the camps in the mid-1930s, he set about creating a new
family company--this time, illegal. By the late 1940s, Isaak Bach,
nominally a humble workshop supervisor in a zipper and safety-pin
factory at 160 rubles a month, was head of a company owning at least
a dozen factories manufacturing underwear, souvenirs, and notions,
and operating a network of stores in all the republics of the Sovie t
Union. He held assets assessed by the prosecution expert at
approximately 87 million rubles."7

No shortage of Russian millionaires seems to be evident. In fact,
like poker players, we can "see the 87 million" and "raise to 200
million," topping example with example.

"In the 1960s, two of the younger generation of that clan--Boris
Roifman and his cousin Peter Order--were seized by the KGB. Both had
been in underground business for about ten years. One turned over
about 200 million rubles" worth of valuables to the authorities, and
the other about three-quarter s that amount." See and raise the 200
millions? "If three comparatively young members of the Roifman clan
had amassed 350 million rubles, what might the whole family's fortune
amount to, after decades in business?"8

Nor did these robber barons of the Russian 1960s lack any style or
panache compared to their 1880s U.S. forebears. "The chief
investigator of the KGB Central Office asked the wealthier of the
two, "What did you need 200 million rubles for?" Peter Order replied,
with a show of bravado, "Only 200 million! I had wanted to make 220
million--one ruble from each Soviet Citizen."9

105

Returning to Russian millionaires later, and how they manage to
dispose of their income, the real question for an economist--counter
or otherwise--is where do they find their market?

The Russian Real Market
-----------------------
The Counter-Economy thrives in North America mostly in "forbidden
fruit" areas and those taxed to death. In Europe and Asia we can also
add the overcoming of restraint of trade of otherwise legitimate
foreign goods--protectionism and its complement, smuggling. But in
the Second World of Communist states, two other sources arise:
consumer black-ward goods--quality and reliability and their
availability, something most North Americans take for granted.

"The parallel market offers not only better, usually foreign-made,
clothing or r are editions of popular authors, but also provides
Soviet citizens in a position to pay with better medical care, better
education and training, better vacations, bette r interior decorating
for their apartments, better babysitting facilities, better
transportation, even identification papers, diplomas, and other
documents. More than that, not only private individuals but
governmental firms, agencies, and collective farms frequently use
services of the parallel market in their efforts to obtain equipment,
spare parts, manpower, and professional expertise."10

Consider the problem--as it is in the U.S.S.R.--of driving an
automobile.  Remember, while reading the following portrayal, that
cars are in short supply to begin with and probably require a bribe
to obtain. Now try driving it without the Counter-Economy.

"There is a shortage of service stations in the Soviet Union and
those which exist just don't have spare parts. A friend of mine spent
a month in an effort to buy a windshield for his Moskvitch. All in
vain."

Unlike police, there is usually a counter-economist when you need
one. "Finally he came to a small street, near an automobile plant in
Moscow, where he was approached by somebody who introduced himself as
a worker at this plant and promised to deliver the windshield the
same day for a reasonable compensation,

106

even less than the official price. Needless to say, the worker kept
his promise."11

One also gets what one pays for in the Counter-Economy, so
reliability is important in attracting consumers. (Of course, the
governments in all countries spend fortunes on propaganda to convince
you of the unreliability of black marketeers--and the unfailing
reliability of government services.) Examples abound here. "A car
owner in Armavir in southern Russia sent a letter to a driver's
magazine, reporting that he was refused help at a service station.
"But then, a worker standing nearby chimed in: let him bring it in,
he said. I'll fix it quickly." And the "sharpeared" mechanic carried
out the job on the spot, pricing it at six rubles. "Five rubles for
me, and one for the till."12 Six rubles would be cheap at a U.S.
garage.

And again: "Another driver, from the Crimean city of Yevpatoria,
complained that, although he parked his car first at the service
station, attendants did no t pay any attention to him and started to
inspect other autos, which arrived later, presumably because their
drivers had promised good tips. His protests did not help and
according to the letter from this customer, the things he saw and
heard there made him wonder whether it was a state enterprise or a
private concern."13

Obviously it was the latter. Some may find it encouraging that
there's a paradise where the masses know how to scorn an economic
law-abider--though Russia may not have been where they thought to
look for it. But an important point in the first example is missed if
one ignores the necessity of conducting the business
counter-economically.

"Thousands of business executives have been put in jail for alleged
violations of the Soviet legislation. Many of these trials would
look rather peculiar to a foreigner. The thing is that, in quite a
few such cases, even the prosecution did not insist that defendants
took a penny for themselves. The accused were stealing, selling at
the parallel market, and buying stolen goods, not in order to make a
fortune but just to get necessary supplies for their enterprises and
collective farms."14

107

That last statement, to be sure, is devastating. If true, the reality
of the market has smashed the facade of communism, as Marxists like
to put it, objectively. And this reality penetrates to the finest
details.

"Literaturnya Gazeta tells about two collective farm chairmen,
convicted for buying stolen property from thieves. One purchased
desperately needed pipes for a crew-shed; the other, boxes to pack
apples. Significantly, no personal profit was involved in either
case. Both collective farm chairmen, presumably, did not have a
chance to get pipes and boxes through normal state supply channels.
One of these chairmen later asked in desperation: which is more
criminal--to pay thousands of rubles to thieves or to lose a
harvest? This was the real alternative he faced."15

In a showdown between the objective forces of the market and the
subjective forces of statist ideology, the former is as inexorable as
the "forces of history" are supposed to be to a Marxist. "There was
a meat store close to a place where I used to live in Moscow. For
many years, this store was known for having an unusually good choice
of meat. But, suddenly, steaks, lamb legs, and other rare items
disappeared. Salesmen told the story of an old director, a Jew
without a high school education but well-adjusted to unofficial rules
of the Soviet trade, who was replaced by a Plekhanov's Economic
Institute graduate. The new director declared that he would not
tolerate any violations of law in his store.

He refused to bribe district warehouse officials and, consequently,
supplies of meat were almost cut off. The salesmen could no longer
make a living by taking fees from grateful customers for whom they
used to save good pieces of meat.  Previously, they had shared their
underground income with the former director, providing him with
much-needed reserves of unregistered cash. Now the practice was
stopped. But, without free cash, the director was unable to pay truck
drivers for unloading their trucks and the drivers refused to do it
free."

And so the market responded to the director's ideological
pronouncements.  "Both truck drivers and salesmen, angered by the new
regulations, began to complain to district party committee. The
former director would easily take care of such charges, merely
bribing the district committee officials. But the new on e found
himself in real trouble. More, without supplies of good meat, his
store was failing to fulfill the plan. Everyone was sure that, soon,
the director would be

108

dismissed." A happy ending to this tale? "But it did not happen. On
the contrary, steaks, lambs, partridges reappeared in the store.
There was no need to ask how it happened. It was clear that the young
economist finally learned the real rules of Soviet trade that he had
not been taught at the Plekhanov Institute."16

How It's Done
-------------
The simplest of economic studies informs us that one needs customers,
labor, and capital goods. One can use one's own labor, take goods
available--say, on the factory where one ostensibly works, and find
customers in passersby, relatives, and friends. This is done in the
Soviet Union, as it is everywhere else. But the more interesting
cases, which document the activity of largescale countereconomic
activity, need distribution networks, hired laborers, and trade with
others for capital goods (production). How is that done in Russia
today?

One can buy an existing business, but even that is not simple "when
the owner-sellers have no rights in law."17 One actually buys a
network of connections and the trust of those countereconomists. But
it can be done, with the all-important acceptance of reasonable risk,
and is done.

"The prospective purchaser obviously has no way of previously
assessing the enterprise's potential production, sales, or income.
Buying and selling underground enterprises thus can succeed only in
an atmosphere of complete trust among all parties and respect for the
unwritten laws of the milieu. In thi s atmosphere, the purchaser
hands over to the seller, with no receipt and no witnesses, tens "
often hundreds--of thousands of rubles. In a case where the parties
do not trust one another, the money is transferred to a third party
trus ted by both principals, and he passes it on to the seller only
when all conditions of the sale have been met."18

Those even superficially acquainted with Western business may note
that, save for the increased risk from a hostile State, the method is
similar to that practiced in the West. In fact, all economic
activities can be practiced countereconomical ly when the risks are
acceptable.

109

The fascination of Counter-Economics, besides that arising from its
freer nature than that of approved, regulated, and controlled
business, comes from the modification to standard business practices
whatever they are, as they change in time and space. As we have seen
and will see, it is quite possible that the modifications to reduce
risk or even outright scofflawing may be cheaper "far cheaper" than
submission and compliance. The implications of that will be dealt
with at the end of the book.

Delving into the inner machinery of large-scale counter-economic
business is difficult. Existing ones have little incentive to "blow
their cover" even in Western publications, which, after all, are
readily available and scanned by the KGB, if not the DCMSP. But the
Lazar Glazenberg case did reveal the workings of that medium-size
operation which, although finally broken, operated successfully for a
long time. The Glazenberg brothers, by the way, even had a board of
directors.19

Here, in lengthy detail, since the core of our case is being
demonstrated, is how it worked:

"The position of those officially in charge of the factories housing
the Glazenbergs" enterprises was unusual: they exercised no control
over the production and economic activities of their enterprises,
this control being assumed by the Glazenbergs or their appointed
managers. The official directors" functions were purely decorative
and boiled down to liaison with party and state organs. Through
trusted agents, the Glazenbergs normally paid them 500 to 1000 rubles
a month, depending on the size of the enterprise and the usefulness
of the director. One of their operations was run under the cover of
the Fisherman/Sportsman Sporting Goods Co. in Moscow, and they paid
its director 1,500 rubles a month because he held the important title
of Hero of the Soviet Union."20

So much for the "bosses." How about the working class? "Obviously,
the complicity of many blue-collar workers is also required in the
manufacture of left-hand goods. It is almost impossible to recruit an
entire labor force on the basis of total trust, but the Glazenberg
system contrived its own incentives. The laborers knew full well that
goods were being produced off the books, but they

110

were interested in the extra money paid for left-hand production
"higher than the official rates and not subject to taxation."21

And how about the capital goods needed? "The Glazenberg brothers
cooperated with other underground businesses: clasps for handbags,
buttons for leather jackets, and labels were all manufactured to
their specifications by underground enterprises in Moscow, Vilnius,
and Riga. But the main source of materials" and here the Glazenbergs
were no different from other underground enterprises "was the
factory itself: materials saved from what the factory received for
its official production" that is, materials stolen from the
state."22

The Soviet State was particularly interested in this alleged theft;
after all, it uses remarkably similar means, morally speaking, in
acquiring those goods in the first place (as do all states). We may
thank the diligent prosecutor for the rest of our information.

"The quantity of off-the-books merchandise produced from these
"saved" materials provoked the major arguments between prosecution
and defense during the trial. The point was vital to the defendants,
for the quantity of materials saved for left-hand production would
determine the gravity of the judgments against them" from 15 years in
prison to death.

"The prosecution was able to prove that reserves were prepared in
advance to yield secret surpluses. In the planning stages for
production of a new product, the Glazenbergs would negotiate with the
people in laboratories or institutes responsible for setting the
factory's norms for new materials needed as well as for allowable
wastage. In return for large bribes, these technicians deliberately
inflated the usage and waste norms, thus allowing the creation of
huge surpluses for manufacture of merchandise off the books.

"Other sorts of secret economies were made during the manufacturing
process.  Expert witnesses testified in court that they had measured
coats and jackets legally manufactured at the factory, and the
measurements did not tally with the sizes on the labels, because the
factory's cutters had reduced the size of each pattern piece.
Chemists testified that they had analyzed the artificial
leather

111

legally produced by the Glazenberg factory: the quantities of dyes
and other ingredients fell short of the official specifications."23

Finally, let us stick with the Glazenbergs a little longer and solve
the last and crucial problem: distribution.

"One would think that in a country like the Soviet Union, where trade
and both the wholesale and retail levels is a state monopoly, the
large-scale marketing of left-hand merchandise would simply not be
feasible. The Glazenbergs proved otherwise. When the brothers were
beginning in business and their only product was shopping bags, it
was easy to solve the problem of how to sell the left-hand bags.
Employers of shops selling the factory's output were quite willing to
accept for sale a certain quantity of illegally produced bags as
well. Of the proceeds, one-third went to the shop employees,
two-thirds to the Glazenbergs.

"As the business grew and the range of their wares broadened, the
Glazenbergs" sales outlets had to grow too. Through friends and
family connections, they added to their network stores that had not
been supplied with their factory's official merchandise. In time,
even this network of retailers proved too small for the Glazenberg
empire. So a special marketing group was established--to travel the
country and in short order to organize sales outlets in 64 towns and
regions."24

Counter Reaction to Counter-Economics
-------------------------------------
"The Soviet regime scarcely can feel comfortable with the huge scale
of the parallel market activities. First of all, a totalitarian
state, by its very nature, cannot appreciate any initiative coming
from outside the institutional system. It sees such initiatives as a
threat to its control over the economy and the people. A totalitarian
state does not like it when some of its citizens become, at least
partly, financially independent from the regime "when their fortunes
do not totally depend on the State."25

Dropping the words "Soviet" and "totalitarian" in the above paragraph
changes nothing. No State appreciates initiative by its citizens
outside its control. See chapters one and two to begin with. What is
significant here is the helplessness of

112

the State toward counter-economic activity and the potency of the
individuals.  This is not just "power to the people" but power to the
individual person.

And the most totalitarian expression of collectivism cannot crush it.
Worse, the CounterEconomy corrodes, corrupts, splinters, and
ultimately smashes the State.  Besides winning away its citizens and
restoring "public goods" (tax plunder) to the "private sector," "The
black market also causes serious economic distortions and interferes
with official economic plans. From the point of view of governmental
economic agencies, equipment and supplies, which are obtained at the
parallel market by some energetic managers, could be needed more and
could be used more effectively by other firms and enterprises."26 But
that "need" is i n the judgment of the State's planners; the people
have spoken, countereconomically, that the need "demand" is
otherwise and overruled the entire Soviet State.

"Moral considerations are also a factor here. Underground activities
with their secret operations create far-reaching psychological
consequences for large sectors of the Soviet populace. And private
enterprise is absolutely inconsistent with an official communist
ideology."27 The mighty Soviet State must not only put up with the
Counter-Economy but put up with its encroachment on its territory and
people.

Far worse. The Soviet leadership itself is not free of
counter-economic taint.--It is fair to say, while authorities are
basically opposed to the parallel market, they are forced to live
with it and, sometimes, do not hesitate to use it."28 Both Pravda and
Literaturnya Gazeta report authorities ordering underlings to seek
out facesaving (and other-saving) parts and other capital goods in
the Counter-Economy.

"Literaturnya Gazeta tells about officials, pressuring collective
farm chairmen to go to the parallel market. According to the paper,
these officials suggest to the chairmen whose farms are short of
spare parts for agricultural machinery to fish for parts "at the
bottom of the sea" but to fulfill plans. They even promise chairmen
their sponsorship in case of any trouble with the police. The story
carried by Literaturnya Gazeta also tells about construction managers
who did not get nails but were advised by their superiors to fulfill
plans at any cost."29

113

It should be stressed here that it is not only the segment of the
Counter-Economy that the U.S.S.R. considers illegal, or, segments
that, say, the U.S. allows that is involved, but all the
Counter-Economy. A lurid example is provided by Simes that could
apply to U.S.'s CIA, France's Deuxieme Bureau or SDECE, and Britain's
MI6.

"Prostitution is illegal in the Soviet Union. But the KGB co-opt many
prostitute's dealing with foreigners, and prostitutes paid in foreign
currency surrender part of their earnings to the KGB cashier."30 The
official people's pimp?

And it should be stressed that the free market does not grow because
government gets more liberal (or libertarian); rather, the
counter-economic defiance of the people forces the State's retreat in
order to hang on to what power it can.

"Generally speaking, during recent years some kind of tolerance, if
not approval, has developed in the Soviet Union regarding certain
kinds of parallel market activities."31 Next thing you know, we'll
hear Izvestia will give countereconomists a sympathetic hearing and
Leonid Brezhnev will call for repeal of economic laws.

"In an editorial introduction written by Izvestiya to an article
about two engineers who get in trouble with authorities for precisely
such actions, editorial writers have clear sympathy with the people
who were forced to break the law in order to do "their important job"
properly. Both article and editorial as well as numerous other
statements made by Soviet journalists and officials, including
General Secretary Brezhnev, call to eliminate "unjustified
limitations and small-minded regulation" imposed on the economic
management."32 What more can one say?

The One Failure of the Counter-Economy
--------------------------------------
There is a problem and a question yet left to be answered about the
massive Soviet CounterEconomy, and the answers will bear strongly on
the analysis and study of the rest of the world's Counter-Economy.
Before answering, one should point out that only a narrow definition
of economics has been dealt with so far and much of the Soviet
Counter-Economy, the underground intellectuals, the famous
"dissidents" in all the arts and humanities, have been shortchanged
here.

114

Still, they have much more coverage in the Western media than
strictly-business activities, which have only the pitifully few
sources footnoted here.

Smuggling and refugees also have a chapter to themselves. Other
references to the rich--counter-economically speaking--material and
example source of Communist-controlled countries will be found
sprinkled in the remaining chapters, which are categorical rather
than geographical. Geographical divisions are, counter-economically
at least, largely irrelevant. At least politically, countereconomists
are determinedly, defiantly, even scornfully, international.  The
problem cited is this: What do the wealthy counter-economists do with
their wealth? There are two answers to that, and the second bears on
the question yet to be asked, which is "Why doesn't the
Counter-Economy become the Economy?"

First, the wealthier Eastern counter-economists may sometimes be able
to leave with their money and enjoy the pleasure spots of the rest of
the world. Even Russia has Riviera-like areas on the Black Sea, but
ostentation in the latter requires explanation to officials. True,
and more often than many would think, making the wealth, reinvesting
it, and making more is a prized end in itself.  James Garner's
character in the 1963 film The Wheeler Dealers expressed it as
"making money is just a way of keeping score" and that's in
relatively free, wideopen Texas. Even so, millionaires in the West
are legendary for concealing their wealth--Getty, Hughes, Koch, and
other reticents are as common as the ostentations of Hearst, Hunt,
and Hammer. The Western official confiscator has only a slightly
shorter leash than his Eastern colleague.

Still, blowing a wad in Brezhnevland is the pits. "The Soviet
underground millionaire's principal aim it not to spend money, but to
conceal it."33 Georgia, homeland of Stalin and privileged, is not too
bad: But the range is enormous: the underground millionaire's
lifestyle in Moscow or Odessa, for example, is very different from
his counterpart's life-style in Georgia.

"One Georgian client of mine, Golidze, who was tried by the Georgia
Supreme Court, openly and legally owned two magnificent houses. Both
were luxuriously furnished with antiques bought from dealers in
Moscow and Leningrad. During a

115

search, authorities confiscated his wife's jewelry, and 45,000 rubles
in cash--which Golidze explained to me was just lying around at home
to cover day-to-day expenses."34

So things are tighter in other Red lands? "The Georgian life-style is
not remotely appreciated by underground millionaires in Moscow, the
Ukraine, and the Baltic Republics. Forsaking the communal apartment
bought under his own name, where he can enjoy expensive foods without
having to hide them from the neighbors; buying a modest dacha under a
relative's name; or taking a trip to a Bulgarian resort on the Black
Sea; all this is about the extent of pleasures that a millionaire of
the older generation dare allow himself. His principal entertainment
is getting together with male colleagues in private, and the eternal
male need for a bit of fun outside the family circle is satisfied by
several salons maintained by women with social or business
connections with the underground milieu. The attraction of these
salons is gambling rather than sex."35

One can readily see that providing entertainment for the fun-loving,
wealthier countereconomists is itself logically, a counter-economic
enterprise. "During the 1960s and 1970s, the salon of one Elizabeth
Mirkien enjoyed great popularity in Moscow. Her husband had been in
the employ of one of the large underground companies and was at the
time serving a prison sentence. In the spirit of the unwritten laws
of the milieu, the husband's partners were providing Elizabeth with a
decent sum of money each month, but she also had an income from the
salon of her small two-room apartment. Middle-aged businessmen liked
to assemble there. Everything was to their liking: the head of the
house herself, a handsome and affable lady; excellent meals; and,
above all, the card tables and roulette wheel. The stakes were very
high, for games of chance occupy a very important place in the life
of a wealthy underground Soviet businessman. Only at the card table
or the roulette wheel in some house such as Elizabeth's are they able
to risk huge losses, feel the euphoria of spending recklessly, feel
rich."36

And yet, save quantitatively, is that a different attitude from that
found in Monte Carlo or Las Vegas?

Why does the Counter-Economy not become the economy? The one failure
of the CounterEconomy so far, is on the
mental-spiritual-psychological level "the abstract level. As we shall
see, the scientists and engineers of abstraction, the

116

intellectuals, have failed so far to analyze and justify the
Counter-Economy. Thus Counter-Economists operate under the dead
weight of unearned guilt. The effort to change this around, to
provide the Counter-Economy with a fullblown, self-justifying
philosophy "agorism" has just begun.37

Nonetheless, the guilt and self-inhibition is evident in Russia as in
the West.

"The oldergeneration millionaires, beyond indulging in such
pleasures, try to shield their children from the risks of the
underground world and make them into academics, doctors or
lawyers."38 That is to say, the children are to be made respectable
and above-ground. This thinking and the failure to generate, so far,
a supply of pro-market ideology, is the failure of the
Counter-Economy.

The Hope of the Future
----------------------
But the children, the second generation counter-economists, are
showing signs of appreciating the innovation and courage of their
forebears "more than the forebears did" and may themselves conclude
the liberation. Their parents try to get them out and into Communist
acceptability. "Despite this, many children--after university
degrees, even doctorates" reaffirm the family tradition and enter
underground business. These second- and third-generation underground
businessmen are not content with the lives of their fathers. They
become habitués of expensive restaurants, whose waiters and managers
know them by name, treat them as honored guests--and report their
binges to the DCMSP. They are not afraid to make large bets at the
races, watched by DCMSP agents, or too timid to buy cars and dachas
at prices equivalent to 20 to 30 years of their official salaries.
They openly visit fashionable resorts, spending five years' official
salary on a month's vacation."39

Nor is their defiance and "coming out" folly or self-destructive
bravado. From their parents" knees, these New Counter-Economists know
what they are doing, and their ingenuity surpasses their teachers. 
"This does not mean that the younger generation of underground
businessmen are lunatics prepared to trade one year of high living
for many years in the prison camps. They all try to be prepared to
justify their expenditures by pointing to some sort of legal income.
A common way is to buy a lottery ticket or

117

government loan bond that has had a big win. The biggest of the
younger businessmen retain paid agents among bank employees who
persuade winners who come to pick up their money to sell the lucky
ticket for two to three times the amount of the win. But the main
insurance for the younger generation remains the bribing of DCMSP
officials--at which they outdo even their parents."40

When everyone is linked by self-interest to their fellow
counter-economists, in whole or part, in Russia or anywhere, and they
are fully aware of this, the Counter-Economy will inescapably
succeed. The base is there. "According to the Soviet Writers Union
weekly, Literaturnya Gazeta, during only year, occupants of new
Moscow apartments paid ten million rubles to private tradesmen for
"additional improvements to their apartment."41

Them And Us
-----------
Confirmation of this state of affairs in the Union of Soviet
Socialist Republics comes from the most Establishment of sources--The
New York Times Russian correspondent, Hedrick Smith, observed:
"Corruption and illegal private enterprise in Russia, "creeping
capitalism," as some Russians playfully call it, grow out of the very
nature of the Soviet economy and its efficiencies--shortages, poor
quality goods, terrible delays in service. They constitute more than
a black market, as Westerners are accustomed to thinking of it. For
parallel to the official economy, there exists an entire, thriving
counter-economy which handles an enormous volume of hidden or
semi-hidden trade that is indispensable for institutions as well as
individuals. Practically any material or service can be arranged
nalevo [nalevo means "on the left," but comes across as "on the side"
or "under the table"]--from renting a holiday cottage in the
country, buying a raincoat or a good pair of shoes in a state store,
getting a smart dress made by a good seamstress, transporting a sofa
across town, having the plumbing fixed or sound-proofing installed on
your apartment door, being treated by a good dentist, sending your
children to a private playschool, arranging home consultation with a
top-flight surgeon, to erecting buildings and laying pipe in a
collective farm."42

118

As we have seen in the first two chapters, Westerners are rapidly
becoming accustomed to thinking of a far wider counter-economy. All
the sources mentioned in this chapter convey this feeling of
difference--which is valid--but with an implication of qualitative
rather than quantitative difference. "Setting aside such sensational
cases of abusing official positions, only a small part of the
operations of the Soviet counter-economy would be considered criminal
in the West. To be sure, the Soviet Union has embezzlers, car theft
rings, prostitutes, narcotics traffickers, armed bank robbers, and an
occasional band of extortionists posing as police units complete with
uniforms, handcuffs and documents, shaking down the innocent
offenders who would be criminals anywhere."

Including, it must be added, in the Counter-Economy itself. Smith's
list is the red market of violence and coercion, not the peaceful,
state-dodging black market.

He continues, "But much of the private hustling on the black market
would not be illegal if Soviet Communism permitted the kind of small
private trade sector that exists legally under Hungarian, Polish, or
East German brands of Communism."43

Such naivete is interesting for the many things it tells us. While
it's true that releasing some of human action as is done in the other
East European countries would reduce the counter-economy slightly,
Smith seems unaware how vast it is there. Furthermore, he is unaware,
it seems, how vast it is in New York City, his home base. Because New
York is more highly regulated than the rest of the U.S. in many
respects--taxi medallions, higher tax rates, for example--it swarms
with gypsy cabs, unlicensed food vendors, non-union carpenters and
movers, tobacco bootleggers, or "buttleggers," and dealers in all
illicit substances and prohibited copies (computer programs to
records). Perhaps, like the New Class of Communist aristocrats he
portrays in their closed-off suburbs away from the suffering Moscow
masses, he belongs to a class which avoids such street contact.44

Smith does perceive, at least dimly, the revolutionary possibilities.
"But the regime faces a dilemma: As one Russian, echoed by many
others, observed to me, "Everyone in the Soviet retail trade is a
thief and you can't put them all in jail." And yet he confuses
reform with revolution near the end. "The Party knows, he reasoned,
that people who are chasing after illegal goods in the
counter-economy are not worried about reforms. Moreover so long as
the public

119

takes the counter-economy as a necessary and desirable fact of life,
there is scant hope of collaboration for strict enforcement."45

The resolution in the Russian--and Western--mind of this dichotomy
could well end the statism in favor of a complete Counter-Economy. Of
course, it would then be the economy, a free market. Smith has an
anecdote which illustrates the confusion of economic efficiency and
freedom with anti-social inhumanity.

"A medical scientist who emigrated to America in 1974 after working
at one of Moscow's leading medical institutes praised Russian doctors
as "more humane" than profit-oriented private physicians in America
and endorsed the concept of socialized medicine. "But you cannot
imagine how poor is the general quality of medical service," he said.
"In Rejazan (a city of 400,000) where I grew up, they have very bad
equipment. They lacked very simple things--medicines for example.
The qualification of the doctors is much lower than in Moscow. But
the worst problem in the system is poor organization and bad nursing
service. The nurses do sterilization very badly. After operations,
even in our institute which is one of the very top ones, we had a lot
of sepsis, festering wounds, infections, and suppuration. The nurses
were not clean enough. They made mistakes in operations. Our
institute director became very angry because he would do beautiful
operations, and then there were those infections. So often, you know,
the middle-level personnel do not receive good pay and they are not
reliable, not competent. Once I was in Kharkov and I had to be
operated on for appendicitis in an ordinary district hospital. It was
so dirty that you cannot imagine it. The sheets were grey from such
long use. The clothes of the hospital workers were not clean enough.
They took special care of me because I was from this important
institute in Moscow. Still I got an infection and so did others. I
saw one man die in my presence after an appendicitis operation
because of this problem."46

This is the overground economy in the most statist area in the world.
Small wonder people seek cold, profit-seeking marketeers who turn out
clean, precise, antiseptic operations in mass production cheaply--or
if they are prevented, they will seek out black marketeers who will
do it less cheaply but give the customer what he or she wants. Says
Dimitri Simes, "The parallel market is a vital part of the Soviet way
of life. And only fundamental economic and social reforms can

120

wipe it out of existence."47 But can they be fundamental enough, that
is, will the State abolish itself?

The forces of the market, overwhelming the Marxist-religious Forces
of History, may leave no choice. Although Konstantin Simis implies
corruption--countereconomizing the statists themselves--is avoidable,
his conclusion speaks for itself in reply: "And there appears one
final revealing absurdity. Obviously, the Soviet state and the whole
structure of underground enterprise are pitted against each other in
absolute conflict and contradiction. Yet these adversaries are
weirdly allied. They are bound by corruption. There could be no vast
labyrinth of lawless enterprise--not for a year, not even a
month--without the complicity and the venality of the equally vast
Soviet apparatus charged with enforcing the laws against economic
crime. This official criminality is all-pervasive, from the lowest
officialdom to the highest elite--a cancer plaguing not just the
state but all of Soviet society. This is the awesome cost of a system
dedicated to stifling the most basic impulses of personal freedom."48

That system is not Sovietism, or even Communism, but statism. It
exists and is growing in North America. In the next few chapters, we
shall see how North Americans--and, now and then, the rest of the
world, deals with a world of bureaucracy and nalevo--of legal plunder
and illegal production. First we'll look at the biggest network of
small entrepreneurs in the CounterEconomy, the drug market in all its
aspects and definitions of what drugs are, and then the biggest
problem of Counter-Economics in East and West alike: money and its
control and the ravages of inflation.

Footnotes
1. Free market cracks Red regimes. (1976, July 25). New Libertarian
   Weekly 3(33) p. 1.
2. Simes, D. K. (1975). The Soviet parallel market. Washington, DC:
   Center for Strategic and International Studies, Georgetown
   University, p. 25.
3. Simis, K. (1981, June 29). Russia's underground millionaires.
   Fortune, p. 37.
4. Ibid., pp. 38-39.
5. Ibid.
6. Ibid.

121

7. Ibid.
8. Ibid.
9. Ibid.
10. Simes, D. K. op. cit., p. 70.
11. Ibid.
12. Ibid., p. 7.
13. Ibid.
14. Ibid., p. 16.
15. Ibid., p. 17.
16. Ibid., p. 18.
17. Simis, K. op. cit., p. 40.
18. Ibid., p. 41.
19. Ibid.
20. Ibid.
21. Ibid.
22. Ibid.
23. Ibid., pp. 41-42.
24. Ibid., p. 42.
25. Simes, D. K. op. cit., p. 21.
26. Ibid.
27. Ibid.
28. Ibid., p. 22.
29. Ibid., pp. 23-24.
30. Ibid., p. 24.
31. Ibid.
32. Simis, K. op. cit., p. 49.
33. Ibid.
34. Ibid.
35. Ibid.
36. See, for example, J. Neil Schulman's novel, Alongside Night
    (Crown hardcover, 1979; Ace paperback August 1982).
37. Simis, K. op. cit., p. 47.
38. Ibid.
39. Ibid.
40. Simes, D. K., op. cit., p. 1, footnote 1.

122

41. Smith, H. (1977). The Russians. New York: Ballantine Books, pp.
    112-113.  Chapter Three is entirely devoted to Counter-Economics
    in Russia, and Smith is the first person after myself I have
    found to use the term "counter-economy," although he does not use
    "Counter-Economics" or "counter-economist." A communication with
    him revealed no knowledge of my prior use from February, 1974
    (before an audience of the Free Market Forum in California, and
    subsequently in hundreds of libertarian publications). His book,
    by the by, is recommended.
42. Ibid., p. 132.
43. While Smith lived in Russia, the author lived in New York's East
    Village in a cluster of apartments of hard-core
    counter-economists and worked countereconomically with New
    Zealand and Australian illegal aliens, during the period
    1972-1975.
44. Smith, op. cit., p. 133.
45. Ibid., pp. 94-95.
46. Simes, D. K., op. cit., p. 25.
47. Simis, K. op. cit., p. 50.

123

4. Drug Counter-Economics
-------------------------
To many people, illicit drugs and black market are strongly
connected. The case for the existence of the counter-economy of drug
consumption, production, agriculture, distribution network,
financing, transportation, and smuggling, and even its use as an
alternate currency has been made in the popular press from High Times
to the New York Times.

Rather than making the counter-economic understanding of the drug
market easier to convey for the author, the preconceptions and
prejudices involved make it the most difficult chapter in the book.
Nonetheless, the issue is best tackled forthrightly and immediately.
The problem is not the mechanics--though that is often
misrepresented, as we shall see--but the intense irrationality
surrounding the subject. Drug abuse is a term in great need of
disabuse.

Drug Disabuse
-------------
If we discussed the marketing of acetylsalicylic acid to beat Bayer
Aspirin's monopoly prices, few would be disturbed. Can we abuse
"aspirin?" Medical experts suggest that an excess causes stomach
bleeding, so it seems possible.  Acetylsalicylic acid is a
pharmaceutical item, sold in "drug stores." Where is the "aspirin
abuse problem?"

Let us look at tobacco. While heavily restricted in marketing by
anti-advertising regulation and taxed higher than anything else, it
remains "legal." Nicotine, tobacco's most active ingredient, is rated
somewhere between caffeine and tetrahydrocannabinol (coffee and pot)
in social acceptance, and is as much a "drug" as either. Today it is
still legal and a much-maligned nonproblem.

Should the final step toward outlawing of cigarettes and pipes be
taken tomorrow, it would undoubtedly touch off a civil war in North
America. While smokers have been "taking it," in the form of constant
nagging in the media and petty harassment at cocktail parties as long
as they could get their "fix," they would flagrantly and massively
disobey any laws stopping them from obtaining it. Remember, a
majority of people--not just adults--of both sexes and all races
outside the most poverty-stricken parts of the world smoke tobacco.

124

One step from aspirin to tobacco, another to alcohol. Booze was
slightly less popular and slightly more "powerful" (disabling when
over-consumed) and actually did meet with an era of Prohibition.

Prohibition was not defeated by political reform, organized
revolution, or even street activists--though all were around in the
United States in the 1920s. What is almost universally known is that
it was abundantly and easily available at a price little different
from the legal, taxed price, and the "cost" of entering this
market--in terms of additional risk--was so low that one often drank
in front of senators and even sheriffs with impunity.

The failure of Prohibition to prohibit was the most spectacular
triumph of Counter-Economics in the United States. Alcohol "in
moderation" (whatever that is) is now almost completely acceptable.

Alas, it is almost totally "white market" and taxed to death, second
only to the taxation of tobacco products.

Let us take one more step to marijuana along the drug spectrum.

Tetrahydrocannabinol, at least as found in joints (as opposed to hash
oil) is less powerful than alcohol. Yet its popular acceptance is
lower; that is, its use is not enjoyed by a majority in the
democratic countries. Hence, it is illegal.

The Counter-Economy sector connected with marijuana is so large that
it touches nearly every man, woman, and child in North America (and
much of the rest of the world). This claim will be backed up in the
next section; a different point is being made here.

Let us skip over one drug spectrum step: what about arsenic and
cyanide? These substances are not only not illegal but not even all
that controlled. Is there any proscribed drug as capable of harm with
as few "redeeming" side effects ? Why are not cyanide and arsenic the
most persecuted drugs of all? People do take them. But in almost all
journalese you will never hear about "another arsenic related death"
Or "cyanide abuse." The usual term is suicide.

125

Whatever the potency and "threat" of heroin, opium, lysergic acid
diethylamide, or amphetamines--and they lie between alcohol and
arsenic by anyone's estimate--they are something "special" in the
eyes of a large sector of society with considerable political clout.
Is it a Puritan hatred of pleasure, then? How about the prohibition
of Laetrile (which is also faltering at the time of this writing)?

Drugs are not a poison unless chosen for that use. They are not a
cure unless chosen for that use. They are not agents of pleasure or
escape or stimulation unless chosen for that use. In short, the
chemicals are irrelevant to any "drug problem"--drug abuse is choice
abuse.

What one should choose is a religious problem, in the broadest sense
of the term.

Choosing the wrong drugs (and almost everyone chooses some, however
"mild" or innocuous) is exactly like choosing the wrong religion a
couple of centuries ago--you are an infidel, heretic, or heathen and
you will be hunted down and persecuted. You will also be aided,
befriended, and even hidden from your persecutors by sympathizers
with your beliefs.

There is one major difference between most commonly understood
religious practices and the use of drugs: the trade in physical
goods. While there is a giant market in religion, outlawing
associated material goods merely pinches the believers a bit and
often hardens their convictions.

Outlawing drugs discourages a few marginal buyers but just as often
hardens the users and deepens their commitment. Would there exist the
marijuana-based counter-culture or laetrilebased, mostly right-wing,
movement if the State had not suppressed their drugs-of-choice?

And, of course, the line between drug culture and religion has
actually been crossed many times: peyote-based Indian and neo-Indian
hippie sects, the marijuana (ganja)-based Rastafarians, and the
numerous "accepted" religions that use wine (persecuted during
Prohibition) or food rules and dietary restrictions (Orthodox Jews
and fundamentalist Christians).

126

One's choice of religion has become, largely, and in most countries,
no longer the business of the State. At least in the more enlightened
countries of the West, one's choice of drugs is being perceived more
and more as a question of individual conscience. Until this view
prevails, the drug market is the greatest single recruiting and
consciousness-raising sector of the Counter-Economy, with the
exception of tax avoidance.1

The Drug Capital Pyramid
------------------------
To understand the vastness of the interconnectedness of the drug
market, one needs to introduce an important concept of economics, and
to discard a misconception mostly spawned by the propaganda of the
Drug Wars fought by several levels and agencies of the State. The
latter is the myth of the mob or "organized crime;" the former is the
concept of the capital pyramid. One is, in a sense, the mirror-image
or perversion of the other.

The term "organized crime" says too much. If you and your neighbors
work together to beat taxes or the draft or distribute and consume
drugs--anything the State considers a crime--you are a "conspiracy;"
that is, by not working solo, you have committed an additional crime.
You are organized criminals and the organized government (some would
say disorganized government) dislikes that even more. The degree of
formality of this organization can be very slight indeed. You may not
even know personally those with whom you deal; you may simply meet,
transact, and possibly never meet again.

The marketplace spontaneously organizes supply and demand, regardless
of commodity. People need not add any ties or fondness or
supportiveness to these ephemeral links but, being people, they do,
and we shall delve into this awareness expansion or consciousness
raising later in this chapter. The construction of a giant
superstructure across many borders and in minute detail on every
street of agriculture, processing, shipping, refining, wholesaling,
and distribution requires no long-term conspiring or formal
organization such as a syndicate or "Mafia."

Gangsters, the Mob, whatever they're called, are not the drug market
or even part of the Counter-Economy; rather, they are the State
within the State. They prey

127

upon the countereconomists by collecting "protection" taxes,
regulating trade, and fighting wars. The Cosa Nostra and the Purple
Gang and such serve no function in the Counter-Economy save that of
parasite in exactly the same way the official government does in the
market. In certain backward communities and neighborhoods, usually
some elder ethnic culture, such groups are tolerated or even
supported by frightened people as real protectors, just as such
authoritarian governments are accepted by the people of unenlightened
countries. Yet in the "hot" drug markets of the American university
campuses and Southern California in particular, such mobsters simply
do not exist.

If the Godfather doesn't direct the black market, who or what does?
Rather than some Sicilian's Black Hand, the market is
directed--without government interference or in spite of it--by Adam
Smith's Invisible Hand.

Someone realizes that people are willing to pay for drugs and that
someone realizes that the price will get him or her a profit
sufficient to make it worth his or her effort. Another realizes that
there are these dealers who will pay well for a large amount of a
drug--and will break it up for retail, marking it up to make it worth
their effort. Yet someone else sees the opportunity in setting up a
chemical laboratory to refine drugs and deliver them to a few
wholesalers and another sees the profit in smuggling in drugs to a
few refiners. And still another sees the value in supplying smugglers
in their homeland from farmers in their area looking for a few extra
dollars, pesos, or bat. And farmers see the value in dodging or
paying off the government officials to grow a little extra of a
forbidden crop.

This "vertical" market structure--from layers of producers to a base
of consumers--was discovered, as an economic concept, by Eugen von
Bohm-Bawerk, the greatest Austrian economist next to Ludwig Von
Mises, and called the Capital Pyramid. One of Bohm-Bawerk's theories
states that the more "progressive" the market, the higher the pyramid
grows; that is, the base narrows and the height grows more layers.
More and more wealth is transferred to earlier stages of
production--yet the end product has finer quality and/or, lower price.

The Capital Pyramid of the drug market rivals that of space-shuttle
production--and it is growing, against a literal army of government
agents, armed to the teeth and shooting.2

128

If anything can prove the unstoppable nature of the Counter-Economy,
the triumph of the drug market's Capital Pyramid against the armed
might of the State should. So here is some proof.

The Second World War--Against Drugs
-----------------------------------
It's been said that if Man will not learn from history, he is
condemned to relive it.  Two World Wars may still not have cured us
of world war, but at least there's been a longer gap between them. In
the 1920s, the United States imposed a Prohibition on the drug ethyl
alcohol in all its forms even as various provinces in Canada were
repealing local prohibition as failures. In 1933, the First World
War--and it was fought across borders and on the high seas--against
Demon Booze ended in surrender with the Repeal of Prohibition. Soon
after, the State in all countries stepped up its suppression of
thousands of other chemicals ingested by humans for pleasure, escape,
or stimulation and held it seemingly at stalemate.

Then came the 1960s and the new philosophies, and the rise of
psychedelic drugs. A new war was declared by the State against
lysergic acid diethylamide and peyote and STP, and the old one with
cannabis sativa and amphetamines and tranquilizers ("uppers and
downers") was redoubled.

"War" is not a metaphor here. "The U.S. Coast Guard reports that on
two separate occasions in recent months, U.S. gunboats were forced to
fire shots directly into the hulls of ships carrying marijuana. Coast
Guard officials say this is the first time since Prohibition--almost
50 years ago--that smuggling boats have actually been fired upon and
hit by Coast Guard ships in the process of making arrests.

"Commandant John Hayes says that until the two recent incidents,
seizures at sea have required, at the most, a warning shot or two
across the bow to force the vessel to surrender. Neither of the
shooting incidents resulted in injuries. Hayes says that more and
more ships are trying to outrun Coast Guard cutters because marijuana
has become a big business, with single cargoes worth millions of
dollars. The Coast Guard estimates that $6 to $8 billion in illicit
weed was successfully smuggled by ships into the U.S. last year."3

129

The United States, largely through the Drug Enforcement
Administration, has opened up fronts on the war throughout Central
and South America, both ends of Asia, and Western Europe, a true
World War. Yet, "home-grown" remains the biggest source of raw drug
material, as our look at California and Hawaii will reveal. There's
nothing foreign or alien about drug-dealing, but the market is
completely international.

Colombia is described by United Press International as a "Pot
Empire." Riohacha "is the capital of La Guajira state and the hub of
Colombia's biggest illegal industry--growing and smuggling marijuana
in the United States. It is also a key outpost in the government's
battle to reduce the drug traffic, which threatens to overshadow all
of the country's legitimate business."4

How big can this one sector of its Counter-Economy be? "Estimates of
the total Colombian drug business vary, but it is generally put at
around $2 billion annually. A good part of the "pot" lands in the
hands of international dealers based in the United States."5

Colombia is also a distribution and processing center for different
drugs from different countries; it also maintains one of the largest
single labor forces of the Counter-Economy "Colombia also is one of
the countries where cocaine from Peru and Bolivia is processed for
shipment to the United States, mainly by gangs operating out of the
cities of Medellin and Cali. However, the white powder accounts for
less than half the dollar value of the marijuana trade and involves a
much smaller labor force than the 150,000 persons involved in "pot"
trafficking."6

To really get a feel for the large scale of this particular industry,
one needs to absorb an eyewitness description. "At an army base
outside Riohacha, soldiers in T-shirts and fatigue trousers stack
scores of large bales wrapped in burlap bags.

Tons of "Santa Maria Gold," prime marijuana from the slopes of the
Santa Maria Mountains, are being prepared for a bonfire of
destruction after being seized in the latest army operation.

"A dozen trucks confiscated in the action are parked in a row. A few
yards away are the mangled remains of a small plane that crashed on
the highway near the army base presumably when on a marijuana
mission". Through the end of June,

130

the armed forces had seized 80 airplanes in northern Colombia, nearly
all of them registered in the United States. They include a DC-7, a
DC-6, a Convair, and three venerable DC-3"s, along with many small
twin-engine planes. Of that total, 23 planes had crashed while
attempting dangerous landings on makeshift runways. A total of 72
boats, 308 vehicles, and 879 firearms were also confiscated.

"In the same period, 1,169 suspects were arrested. Of the 186
foreigners among the arrested, most were Americans. The army says it
destroyed nearly 38,000 tons of marijuana, including 50,000 bales
ready for shipment and the estimated yield of 25,250 acres. It also
grabbed 2.2 million amphetamine tablets ready for export and 74
pounds of cocaine apparently by marijuana smugglers outside the main
cocaine route."7

That massive drug bust must certainly have set back the Colombian
drug business, right? "We figure we have got our hands on less than
10% of the total production," an army officer said grimly."8 Note
that 10% is lower than taxation rates in most countries.

See, in our present example, how a counter-economic Capital Pyramid
builds a large community of common interest in defence of a black
market. "The root of the problem is money--the dollars and pesos
that convince the farmers to run the risk of raising the illegal crop
and that tempt ill-paid police, soldiers, and even judges to
collaborate with the drug traffic. La Guajira has long been known in
Colombia as an economically depressed area where dealing in
contraband is considered a normal way of life. The local populace
welcomes outsiders with the same open-hearted warmth that Tennessee
mountaineers reserve for internal revenue officers."9 The comparison,
as we have noted, is highly apt.

"Ernesto Samper, president of a national federation of Colombian
financial institutions, estimated that 150,000 Colombians depend on
marijuana for a living and said nearly all are small farmers and
their families [are] low-level drug runners. If Colombia had
legalized production, he said, it could have collected nearly $146
millions in taxes last year instead of spending a comparable amount
on enforcement."10 Another solution to the taxes spent on enforcement
can be found in the previous chapters.

131

This zealous state crackdown on the drug trade is atypical. Moving
from the Latin American theater of this World War to the Middle
Eastern theater--where Israeli, Arab, Christian, and UN soldiers
abound--we see another attitude.  "Not far from where the harvesters
were at work, soldiers were lazily waving cars on down the highway.
To them, hashish was just another crop. Some say this is among the
best hashish in the world. They call it "Lebanese Red," "Lebanese
Blond" and other names. It is made from the marijuana plant--Indian
hemp, it is called in this part of the world--and it is marketed as
oil or in flat pieces that look like the soles of heavy shoes."11

Except for the military attitude, the Colombian scene is repeated.
"It goes out by truck and boat and plane, and is widely thought to
account for as much as a third of all the money that comes into
Lebanon. Lebanon has only a semblance of government, but its banks
are thriving and hashish is one of the major reasons.  "I think we
can say that without a doubt "hash" is the biggest industry in the
country," a Western diplomat who tries to monitor the drug traffic
here said.  Exact figures are hard to come by, but it is estimated
that 80% of the Bekaa Valley is given over to growing hashish. So
much land is in Indian hemp that the valley, one of the richest farm
areas in the world, can no longer produce all the fruits and
vegetables Lebanon needs."12

Most legal industries are nowhere near this size. Can this one drug
industry be so vast and yet prohibited by the State? "And although
growing hashish is technically illegal, the harvest comes in every
year right under the nose of the law--or what is left of the law.
The soldier directing traffic on the road, who cannot fail to notice
that the hashish is being harvested, said: "Growing it is illegal,
but it is not our job to stop it."13 The bureaucratic response is
given to the unstoppable free market.  And the market replies. The
reporter of the above scene interviewed a nearby farmer.

132

"He was standing at the edge of his crop, which in a few days would
be harvested and then dried in a small shed. Then it would be picked
up by the man who had come out earlier to inspect it, to assess the
quality of the plants before agreeing on a price. "This is the best
way to feed my family," the farmer said. "Without hashish, I would be
a poor man."14

While some may describe Lebanon's government as having broken down,
there are certainly plenty of armies--most made up of religious
types with strong anti-drug tenets--marching up and down the
country. Even with far more governments than most people face, the
Counter-Economy survives. "The story is told of a grower who keeps
two military vehicles "tanks" to protect his fields.

It may be an exaggeration, yet it is true that the fields are
virtually never disturbed. Too many people have an interest in the
crop. And it is generally accepted that the growers pay protection
money to the many armed militia groups that operate in the area."15

The interlocking network spreads out at all vertical levels of the
Capital Pyramid horizontally as well. "One expert said that some
hashish is flown to neighboring Middle East states, and that some is
trucked through Syria to Turkey, then on to Europe. The chief client
there is said to be the Netherlands. Most of the hashish, however, is
consumed in the Middle East. Egypt is the biggest buyer."16

The drug counter-economy includes high finance, right up to the
international banking system. "The farmers and middlemen are often
paid in U.S. currency that has been "laundered" a number of times
before it reaches Lebanon in an effort to throw drug agents off the
scent. One source cited the example of a buyer who took an Amsterdam
bank draft and deposited it in a Swiss bank. The money was
transferred to Venezuela, to Taiwan, and then to a bank in one of the
Persian Gulf states before it finally arrived in Beirut.

"Lebanese authorities estimate that $250 million came into the
country last year in connection with the hashish trade. This year,
the estimate is for twice that figure". "The banks are filled with
money," a Western diplomat said"|"17

Over in the Far Eastern theater of our World War, we find a few
differences on specifics but the counter-economic basics remain
comfortably familiar. "Stashed

133

in airliner restrooms, sewn inside baseballs, or taped to the bodies
of smugglers, Pakistani heroin is reaching U.S. and West European
cities in ever-increasing quantities and causing international
concern, U.S. and Pakistani officials say.

Opium cultivation has dropped sharply in this valley and other major
poppy-growing areas of Pakistan. But what remains is apparently more
than ample for a string of underground laboratories that began
producing the country's first heroin in the past year."18

Remembering that the Counter-Economy recognizes no state borders,
we're not surprised to find full market cooperation among those of
different nationalities and religious denominations up and down this
Capital Pyramid. "At least five Iranian chemists were known to be in
the semiautonomous tribal territory of North West Frontier where the
infant heroin industry is located and where law enforcement officers
have no jurisdiction."19

"Heroin is much easier to transport--and conceal--than raw opium
extracted from poppies, and it pays to make the conversion. Ten
kilograms (22 pounds) of raw opium in the currently depressed market
here costs about $300 and yields a kilogram of heroin. This amount of
heroin sells for about $10,000 in Pakistan, at least $45,000 in
Western Europe, and $175,000 on the U.S. East Coast, a U.S. Embassy
official said. Once in the hands of U.S. dealers, the heroin is cut
and sold in packets. The income to such dealers runs into the
millions of dollars from a single kilo."20

The Counter-Economy is invulnerable to the State, not by using the
State's concepts of attack and defence, but by market methods--a way
of thinking alien to Statists. It takes governmental actions into
account, along with supply and demand.

"There is a glut of opium in Pakistan because of low prices arising
from disturbed conditions in the traditional "golden crescent"
markets in Iran and Afghanistan. Guerrilla warfare has made shipping
raw opium through Afghan mountain passes too risky and the death
penalty imposed by the Iranian revolutionary regime on drug dealers
has dampened their enthusiasm for the trade: Filling the gap,
Pakistani narcotic entrepreneurs secured the refining know-how

134

and either used Persian Gulf sea routes or the numerous direct air
links with the West to smuggle out the heroin, the sources said."21

The interchangeability of methods in the Counter-Economy is highly
useful to entrepreneurs. Those who find the drugs involved unsavory
might still learn valuable techniques for risk reduction. Within the
drug industry, one product line may be instructive to another.

"A number of Iranians operating independently have been picked up in
the past year through sheer inexperience," in the United States, said
an American official.

"But the Pakistanis have been smarter by using networks which they
had established earlier for hashish." Pakistan lacks the domestic
consumption on the scale of Iran in the past. But as heroin refining
expands here, drug-enforcement officials fear that demand for opium
will pick up."22

In 1980, economically depressed Jamaica threw out the socialist
government and installed Edward Seaga. Part of Jamaica's problem was
its chronically negative balance of payments--a balance which,
naturally, did not include countereconomic exports. Seaga threatened
to legalize the ganja trade and count marijuana in the balance of
payments, which, nearly everyone agreed, would have given Jamaica a
positive balance and gotten the International Monetary Fund bankers
off its back.

Rather than accept a return to sound accounting practices and an
extension of the free market--the U.S. could have always claimed a
concession to the local large Jamaican religion, the
Rastafarians--the U.S. hiked foreign aid and extended loans. The
Rastafarians, by the way, constitute a third force in Jamaican
politics, but are largely anti-political, undoubtedly from their
continuous contact with the reality of the marketplace. (Rastafarians
have a distribution network throughout the U.S. and U.K. thanks to
the present popularity of reggae, their sect's music, which is allied
to punk rock.)

The American government does not hesitate to overthrow or destabilize
other States that are on the wrong side of the Second World Drug War.
Bolivia's anticommunist junta, which overthrew a democratic
government in 1980, was destabilized by the DEA and CIA. General
Torres' problem was not his cavalier

135

disregard for democracy and "human rights" (no government respects
human rights) and certainly not his opposition to Bolivian socialism;
alas, he was suspected of being the main military "protection" of the
Bolivian drug industry.  A counter-economic head of state being a
contradiction, General Torres did not need much additional
instability. Still, the extent to which this story was accepted at
face value by many respected magazines and newspapers indicates the
credibility; those reporting from Bolivia and encountering its
Counter-Economy are convinced it could have happened.

While the Drug Warriors lose Colombia, Lebanon, and Pakistan, and
break even or hold the line in Bolivia and Jamaica, where the war
will be decided is on the Home Front. Unlike the World Wars, where
U.S. soil was untouched, the American statists are powerless to
prevent a massive invasion of the continental United States, not to
mention a massive defection to the "enemy" of much of its
citizenry.

Drug Wars: The Home Front
-------------------------
"Federal officials say that the state of Florida would suffer a
serious economic blow if the United States could halt the expanding
cocaine market in the U.S. The U.S. Drug Enforcement Administration
estimates that three-fourths of all the coke entering the U.S. today
comes through the state of Florida; and that the street value of
Florida's cocaine alone exceeds $10 billion a year.

"The Journal of the Addiction Research Foundation says that so much
coke-related cash is generated in Florida that numerous Florida banks
have become dependent on the illicit coke market. According to one
federal official quoted by The Journal, the real estate market in
Florida would "fall flat" if cocaine traffic were suddenly halted,
allegedly because a high percentage of Florida's purchases of land
and houses involve money stemming from the cocaine trade."23

The same Capital Pyramid, the same horizontal networking, and the
same operational modes and risk-reduction methods as we saw around
the world are evident at home in the United States, that government
in the world most committed to crushing Devil Weed and Killer Coke.
Still, Florida is a

136

marketplace; surely keeping out those nasty foreigners with their
filthy habits (see Chapter Ten on immigration) would end the Drug
Menace? Even Hawaii, the state of lavish marijuana plantations and a
futures commodity market in pot crops,24 would be cut off with a
tight naval blockade?

Unfortunately for those willing to fight on the beaches, to fight on
the shores, and to fight on the landing grounds, the homeland has
fallen. The largest U.S. market--California--is also largely
self-contained, literally from the ground up.

"In the remote hills and trackless valleys of northern California,
it's time to bring in what they call here the "happy harvest." The
grass is as high as an elephant's eye in the shimmering noonday heat.
But the casual visitor rarely spots the tall, saw-toothed plants
tucked away in camouflaged, booby-trapped, and guarded plots. This
fall it's a bumper crop, worth somewhere between $500 million (U.S.)
and $1 billion--probably the most valuable cash crop in the golden
state, food bowl of America. And a lot of people--small-time pirates,
the Mafia, police in helicopters, posses of sheriffs' deputies,
federal narcotics agents--want to snatch it away from the growers."25

California drug agriculture is moving up to the level of King Cotton
or "flowing oceans of golden grain;" we're talking counties, boy.

"The crop is common hemp, cannabis sativa, marijuana, and in the past
three years it has transformed the social and economic life of a vast
five-county area of northern California, which stretches from San
Francisco to the Oregon border. It is, of course, illegal, but in
this 16,000 square miles of rugged country, smallholders find the
risks well worth the annual tax-free income of $200,000 and up that a
diligent farmer can earn."26

Politicians are not necessarily "bought off." There are places "the
potvilles of northern California, oddly named backwoods towns
"Willits, Garberville, Ukiah" where conservative old-timers and
sharp, young university-educated entrepreneurs have an uneasy
alliance. They want the law and the political bosses in Sacramento,
the state capital, to stay out of their business: in this area,
long-depressed by a timber industry slump, pot is a godsend." Still,
the politicians try to jump on the bandwagon. "State Senator Barry
Keene announced that he was

137

pushing a bill to decriminalize cultivation. The physical ill effects
of pot were not proven, he said, "and right now what I see is a
multimillion-dollar business in the heart of my district." Some "very
responsible members of the Chamber of Commerce" had asked him if it
didn't make sense to decriminalize pot. Would it not "diversify the
economy, broaden the tax base, and create jobs in this high
unemployment area?"27

Whether or not the IRS could catch any more taxpayers is debatable,
but the Counter-Economy is already diversified and creating plenty of
jobs, not only without government intervention but in spite and in
defiance of it.  And, as always, we see the Capital Pyramid and the
horizontal networking of the Counter-Economy, as exemplified by the
drug market. Marijuana is not merely a good crop. "It's sent land
values skyrocketing," says realtor Roy Johnson. "It's not my job to
fink to the Internal Revenue Service, to ask where these guys get
their money. Hell, it would be discrimination if I refused to sell
them land." So, in Garberville, there are more real estate offices
than saloons on the main street."28

One politician seems to be ready for another Prohibition-surrender of
1933 in the Drug Wars. "Mendocino County's agricultural commissioner,
Ted Eriksen Jr., recognized the industry's status by listing county
production last year at $90 million. A higher authority ordered the
entry deleted. Amiable, easy-going Eriksen, whose forebears have
lived here since the turn of the century, says: "I guess it's one
thing to make money from moonshine, another to advertise the fact.
Back in Prohibition days my daddy used to ship wine grapes out of the
state in a box labeled DON'T CRUSH THIS. IT MIGHT TURN INTO WINE. I
just don't see much difference in what's happening today. Pot is this
county's No. 1 agricultural product. This harvest, it'll bring in
more than $100 million. People who refuse to recognize that are
burying their heads in the sand."29

Fortunately for those who wish to see the market untaxed,
unregulated, and counter-economic, the Holy Warrior hawks against
drugs shall smite such compromising, realistic doves: "Next year
[1982] is election year in California, so ambitious state politicians
don't quite see it Eriksen's way. Attorney-General

138

George Deukmejian, running for governor, wants the commissioner fired
and is taking court action to remove him."30

California is high-tech and technology comes in near the top of the
Capital Pyramid. "Thanks to the curious sex life of cannabis sativa,
California's young marijuana millionaires have been able to develop a
strain of the weed that outclasses Colombian, Mexican, and even such
specialties as Hawaii's fabled Maui Wowie in potency and popularity.
Cultivation today calls for both science and tender loving care. It
involves force feeding with fertilizer, chemical and organic, and
above all "selective breeding"--the systematic removal of male
plants from the neighborhood of the female. Deprived of male
companionship, the ungerminated heads of the female plant ooze a dark
resin that contains 10 to 12 times as much tetrahydrocannabinol (THC)
as do other varieties. THC is the active agent that gives smokers
their high.

"The result is sinsemilla--literally, "without seeds"--the most
powerful strain of grass in the world, priced at $1,500 to $3,000 a
pound, selling on the street for $200 an ounce."31

The Drug Warriors strike from the sky with liquid death--and the
Counter-Economy simply accounts for the attack. "Helping to force up
the price is the success of Mexico's paraquat spraying program, urged
by the United States.

Once it seemed that nearly every bag of "weed" sold was purportedly
Mexico's Acapulco gold. Today, the great fields south of the U.S.
border are devastated annually with pesticides, and Mexico's share of
the U.S. marijuana market has fallen to an estimated 10 per cent."32

Could not the Holy Spraying Inquisition hit the home-grown heretics?
"Now some California legislators want to use paraquat on the northern
plots. "Why should the taxpayer pay for armies of drug enforcement
agents to go in there and seize the stuff when paraquat could do the
job quickly and easily?" asks Los Angeles Police Chief Daryl Gates.

"The answer is that growers, with heavy popular support, are taking
an over-our-dead-bodies stand against spraying (which kills forest
underbrush as well as pot plants). They helped push through a local
ordinance that forbids aerial spraying,

139

then handed frustrated police another setback when one county voted
against accepting a federal grant to help pay for a "sinsemilla
strike force" set up by California's attorney-general."33

Most counter-economists don't stoop to politics for their
risk-lowering. "Many farmers try to avoid risks and cut costs by
planting on other people's land.  National parks--where vast forest
stretches off the beaten track rarely see a tourist--and other
federal properties are much favored. Says one narcotics agent in
Ukiah, the county's seat, "We've found farms in a dozen national
forests, at Big Sur, even on the Hunter-Ligett Military Reservation
(a huge military training ground)." Others simply grow it in their
own backyard. A 55-year-old grandmother, Jane Schimpff, recently
arrested with a crop worth $50,000, said she had grown her 60 plants
as "a hedge against inflation."34

More on inflation eounter-economics next chapter. But Ms. Schimpff's
action is quintessentially counter-economic, whatever the market.
"Had she known her plantation was so valuable, "Why heavens, I'd have
covered it up better."35

Surely. And her associates know this well and live by it.

"Two years ago Attorney General Deukmejian launched an all-out war on
the farms, leading his agents personally into the fray, followed by
TV crews. Armed with helicopters and an array of electronic warfare
gadgets the strike force seized and destroyed tonnes of weed worth
millions of dollars.

"But despite the huge hauls, agents say they probably seize less than
10 per cent of what is grown in this area."36 Where have we heard
this before? By the way, Florida is not so innocent of dope
agriculture anymore. "An aerial survey has uncovered at least 155
marijuana fields in 41 north and central Florida counties, the
authorities reported yesterday. Federal and State agents have seized
51,189 plants since the surveying project began June 1, the Florida
Department of Law Enforcement said. The clandestine fields included
one in Levy County that contained 13,500 marijuana plants up to 12
feet tall."37

140

The Network
-----------
It does not matter which way the State goes in the near future.
Should it legalize "grass," "coke" and "dust" and "horse" will take
up the slack in the labs and distribution nets and farmers will
"rotate their crops." Some marginal producers will move out, maybe
into tax-evasion counseling. On the other hand, should the State
prohibit something new--thousands of drugs are discovered every
year--or old, like tobacco, the market will expand, and a few more
marginal cases who were thinking about growing, trucking, or dealing
will enter. The State cannot win--though some statists, making a
career out of the Drug Menace, can. And the Counter-Economy cannot
lose, though the poor risks will get weeded out by arrests. And the
Capital Pyramid keeps growing with new technology and techniques.

The drug market reminds us of what we have seen in the Soviet Union,
much as that may irk anti-communists who enjoyed that section.
Perhaps it will help them to accept it if they realize that a Red
takeover of the U.S. would find an intact Counter-Economy ready to
spread out into newly-controlled fields.

Two concepts introduced in this chapter will be referred to heavily
for the rest of the book: the Capital Pyramid and the horizontal
network. Before we leave drugs, the latter lesson has yet to be
absorbed in fullness. Let us walk up the side of the Capital Pyramid
and see just how much this one sector of the Counter-Economy touches
lives (we noted a similar phenomenon in Chapter One, you may recall).

First, the consumers at our base. Every family's got one or more,
even remote Utah Mormon communities or withdrawn Brooklyn Hassidic
neighborhoods. No point in belaboring this save to note that every
person who knows of a family member using any illicit substance is
guilty of conspiracy. That is, they're the "organized" part of
organized crime without even touching anything illegal.  (Who said we
don't have Thought Police yet?) At this point, nearly the entire
population of North America is involved already.

But every dealer has friends, relatives, and acquaintances who
"cover" for him or her, perhaps provide him with safe places and
stashes--maybe a college dorm roommate, maybe a fraternity brother or
sorority sister. And there are the people

141

in the street or campus quad or Malibu cocktail party who see the
transactions and let it happen, perhaps even spontaneously warning
the entrepreneur of the passage of law enforcement.

This libertarian network, which some might consider an entangling web
of corruption, spreads through the rural farming communities as
farmers or their hip offspring diversify the crops blackly.
Scientific labs get a little moonlighting action and silent lab
assistants and cooperative technicians join the network without
membership cards.

"Federal drug enforcers are "falling behind" in the fight against
secret laboratories in this country that illegally produce
stimulants, depressants, and hallucinogens, congressional
investigators said Friday. The General Accounting Office said in a
report that these non-narcotic, dangerous drugs killed more than
3,200 persons in 1979--more than five times the number killed by
heroin, the drug enforcers" primary target. Most of the synthetic
drugs are produced in clandestine laboratories or diverted from the
legitimate drug distribution systems the report said.

"A few DEA field offices have achieved "an impressive increase" in
the number of secret lab seizures "from 33 in 1975 to 234 in 1980"
but the illicit labs continue to flourish, the report said."38

Garages may find they're providing and repairing a lot of vehicles
paid for in kilos rather than dollars, or at least in cash; in any
event, you don't fill out any papers on their jobs and don't ask why
they have hollow bumpers or hidden doors. Hangar techs at airfields
and dock workers at yachting marinas find silence may be Acapulco
golden. And then there's their families and friends who find out,
accidentally or casually, where that bonus came from and, rather than
report it promptly as required by law, they join the network.

At the top of the Capital Pyramid, we may well find the network
extends out from bankers who know where their big depositors came
from but "officially" not their money--and their family and friends
at the country club and social register, including campaign donors,
lawyers--and judges. At this point, vested interest seems an
appropriate term for the strands linking the network.

142

Up and down, spread out across all of society, from bohemian artists
to research chemists, from skid row to the boardroom, and from Watts
to Beverly Hills, the network grows, losing a few leaves, branches
and roots, but always sprouting more. The affinities and confidence
that fill out this skeletal structure may be extended to tax
resistance, draft evasion, inflation protection (next chapter), and
all the other forms of Counter-Economics this book covers.

Often Drug Counter-Economics is the first contact Western youth has
with what their Eastern counterparts contact from birth (and with the
Home Birth movement--see Chapter Thirteen--that may change, too) the
"left-hand goods." Nalevo. It is a lesson that will serve them well
as they run into network after network in the market that really
serves the world: the CounterEconomy.

"America's appetite for marijuana appears insatiable. At least 11
tonnes a day go up in smoke, and consumers demand ever more potent
Strains of the drug.  Former White House adviser and drug authority
Dr. Peter Bourne estimates that the marijuana industry is among the
top halfdozen money-makers in the nation, totaling around $50
billion. Bourne, an advocate of smaller penalties for possession (but
not of legalization), calls marijuana "the country's most difficult
drug problem, a politician's nightmare."39 And a counter-economist's
delight.

One problem that these networks have is a problem in using money;
that is, using the State's monopoly currency. "Four million dollars,
in small bills, is a bit like a St. Bernard: nice, but hard to hide.
So when federal agents burst into the office of a Miami drug ring
last August, they found a pile of money the size of a small
refrigerator. The $4-million haul represented two days' cash flow for
a smuggling operation, posing as a currency exchange firm, that
authorities said had been operating in south Florida for 15 months.
The bust represents a new emphasis on an old law-enforcement
tool--catch crooks by tracking their profits. Few drug dealers accept
MasterCard or Visa, so wholesalers quickly accumulate boxes, bags,
and suitcases full of 10- and 20-dollar bills.

"It's a very severe logistical problem for criminals to move that
much cash," says William Meglen, director of the Custom Service's
currency investigation division. "I mean, we're talking bulk."40

143

But the Counter-Economy is nothing if not innovative and ingenious.
"Frustrated criminals sometimes try to transfer the money in unusual
ways. Maria Rojas of Bogota, Colombia, was arrested at the Miami
airport last year carrying $1.5 million in eight "factory-sealed"
Monopoly boxes. In Florida, stories of customers paying for luxury
automobiles with shopping bags of money are common. One suspected
cocaine dealer paid cash for various parcels of real estate, a
Rolls-Royce, and a 60-foot yacht.

"Miami has become well-known as the Wall Street of this underground
cash.  Federal authorities point to what they call the "grotesque"
amount of currency flowing into the Miami Federal Reserve Bank--where
deposits jumped from around $471 million in 1974 to over $4 billion
in 1979."41

What the substance-of-your-choice vendors need to learn is what our
tax rebels are learning: how to get out of the State's money system,
at least partially. And an additional reason, which they all share
with the rest of the economy, is the State's depreciation of the
forced medium of exchange--inflation.  And so, as we have come to
expect, the market responds with inflation CounterEco nomics.

Footnotes
---------
1. The author (SEK3) is particularly indebted to the famous
   psychiatrist Dr. Thomas Review) for stimulating his evolution but
   he is responsible for his own views. For those checking on vested
   interests, the author confesses to be a social drinker and pipe
   smoker. This area is one of my rare cases of moderation.
2. Bohm-Bawerk, E. V. (1890) Capital and interest. New York:
   Macmillan & Co.  We'll be seeing more of the Austrians all through
   the book.
3. The marijuana smuggling war is heating up the high seas. (1981,
   January 5).  Zodiac News Service.
4. McReynolds, M. (1981, September 7). Uphill fight against
   trafficking: Colombia coast region a "pot" empire. Los Angeles
   Times, p. IA-10.

144

5. Ibid.
6. Ibid.
7. Ibid.
8. Ibid.
9. Ibid.
10. Ibid.
11. Kennedy, J. M. (1981, October 17). "Petroleum of Lebanon" goes to
    market: Hashish harvest is a profitable fact of life in war-torn
    country. Los Angeles Times, p. IA-1.
12. Ibid.
13. Ibid.
14. Ibid.
15. Ibid.
16. Ibid.
17. Ibid.
18. Pakistan opium flooding west. (1981, October 11). Los Angeles
    Times, p. I5.
19. Ibid.
20. Ibid.
21. Ibid.
22. Ibid.
23. Federal officials say that the state of Florida would suffer.
    (1980, April 14). Zodiac News Service.
24. The author had personal contact with an agent of this futures
    market in 1975 but it has passed into other hands since.
25. Scobie, W. (1981, October 12). Pot luck in the high hills.
    Maclean's 94(41), p. 11.
26. Ibid.
27. Ibid.
28. Ibid.
29. Ibid., p. 14.
30. Ibid.
31. Ibid.
32. Ibid.
33. Ibid., p. 17.
34. Ibid.

145

35. Ibid.
36. Ibid.
37. 155 marijuana fields found in aerial survey of Florida. (1981,
    November 17).  New York Times, p. 12.
38. Ostrow, R. J. (1981, November 14). Drug agents face overdose of
    secret labs: GAO accuses enforcers of losing battle against
    non-narcotics. Los Angeles Times, p. I-10.
39. Scobie, W. op. cit., p. 11.
40. Grier, P. (1981, October 29). Paperwork used to do in drug
    dealers: Profits traced as federal agents press drive against
    cash-laden criminals. Los Angeles Times, p. IC-1.
41. Ibid.

146

5. Inflation Counter-Economics
------------------------------
Inflation: The Great Counter-Economizer

Inflation connects and interacts with all of Counter-Economics from
taxes to drugs (as we have just seen and will see more of presently)
and beyond. Its effects, and the recent attempts to comprehend its
nature and workings, have been a great radicalizer of North
Americans. Europeans of East and West and Third Worlders have been as
much if not more affected by inflation, and taken counter-economic
measures against it (most spectacularly in Poland and the most
inflationary Latin American countries) but consciousness-raising
there has not matched that of North America, where an entire genre of
non-fiction books emerged in the early nineteenseventies predicting
further, more catastrophic inflation, advising measures to be taken
against economic ruin (mostly practical measures for individuals and
families) and, most spectacularly, anticipating correctly the surge
in gold price.

Inflation touches--or contaminates--so much of economics (and
counter-economics) because money is involved in most transactions in
a developed economy. The exceptions are easily listed: "psychic"
profit of emotional gain and barter. But even many things--if not
most--done for love involve costs in goods and services, and
"above-ground" bartering is far more expensive than the equivalent
market transaction with some form of money. (Counter-economic
bartering is another concept entirely, as will soon be shown.)1

The shock of sudden awareness of an inflation victim who discovers
what money is and how his or her government manipulates it compares
closely to that of a comfortable patriot facing a draft notice and
discovering that this war is meaningless. Or the shock of a
conservative businessman finding out that the taxes which will
destroy him not only were justified by his beloved Constitution but
that the Federalist government first organized under the Constitution
promptly crushed the Pennsylvania Whisky Tax rebels.

Yet war and taxes are often lightly felt by some victims and harshly
by others.  Inflation is the great counter-economizer: it plunders
all without favor, though, it should be stressed, that plunder goes
somewhere to someone. Widows,

147

orphans, the handicapped, and the devout religious retreatists are
exempt from war and taxes, but not inflation.

The very study of Counter-Economics and its development by this
author began with the great Gold Bug Wave of 1972-73. Harry Browne in
particular, along with Harry Schultz, and later Douglas Casey and
John Pugsley and many others, took a long step from the old
free-enterprise economic movement largely identified with the
political Right. Where these anti-inflation activists departed from
conservatives was by advocating and demonstrating where individuals
could take concrete actions to opt-out of the general economy and
protect themselves. Conservative free-enterprisers continued to urge
support of a different government which would roll back the State
through any of the political parties: Democrats, Republicans,
Libertarians; even the leftist Peace and Freedom Party was considered
as the vehicle for a time (1974).

Harry Browne took yet another step beyond the How You Can Prosper
From The Coming Collapse genre with his How I Found Freedom In An
Unfree World.  Browne discovered loopholes in the State's network of
regulations not just in inflation-protection but throughout the
market. That is, one could legally--or at least not illegally--evade
all taxation, inflation, and controls. Of course, this freedom had a
high price in an unfree world.

The flaws in Browne's positions discouraged some of his large
readership but encouraged others to take the next step. One of the
flaws of Browne's livinginth e-interstices was that one was forced to
go where the State inadvertently directed. There was a further risk
involved in that the government could change its mind and clamp
down--and usually would as soon as someone (like Browne) made these
interstices public and popular.

And so the final step was taken by this author and a few others in
1973: why not apply the lessons of evading the State's regulations
and controls to evading the State's enforcement of controls? To the
surprise of most of us, we theoretical types found a fully
flourishing market already there--without awareness of why they
should be doing what they were doing.

148

Gold was the catalyst and that was no accident. Several libertarians
who were involved in smuggling gold and then publicly displaying it,
defying the American States to arrest them and give them a test case,
found that they were left largely unbothered. The idea expanded: if
the State was largely impotent to suppress gold when it was illegal,
then what was really stopping us from replacing the paper money of
the United States with gold--at least in our transactions?

And so it came to pass that a gold bank (under an assumed name, of
course) developed and is flourishing today. But to grasp the
implications of this event and just how apocalyptic it is,
Counter-Economics is going to have to review a little basic
economics.

The Nature of Inflation
-----------------------
The word inflation is used in two ways, which adds to the
considerable confusion on the subject. Most often, it conjures up
rising prices. The original and proper definition is much clearer and
will be used here. Inflation is the increase of a fiat
(government-created) money supply. One of its consequences is a
general increase in prices (though individual prices can go counter
to the trend).

Money is a medium of exchange. As many who have experimented with the
recent bartering fad have discovered, having something popular to
trade, or to trade for, greatly facilitates finding trading partners.
Someone may want your oil paintings very much but you need shoes, not
the music concert they're offering.

Maybe a shoemaker likes music enough? If half the trading partners
smoke, tobacco will (and often does) become a medium of exchange.
Even non-smokers will accept it, knowing plenty of smokers to trade
with.

People historically went through several different media of exchange.
The more universally accepted the commodity was, the better money it
made. Durability was useful for savings; who wanted their nest egg to
spoil? And such things as easy divisibility for change, compactness,
and consistency of quality all enhanced the monetary aspect. For good
solid chemical reasons, one substance became the obvious and unique
choice--and its closest cousins in the chemist's periodic table of
the elements were the favored alternatives.

149

Gold, silver, copper, platinum, and palladium--these are the material
forms chosen to embody the highly useful abstraction of money. In
French, the word for money is silver (argent). Gold is synonymous
with money in Danish (geld).

Pounds sterling were pounds of silver, even the dollar defined a
(Spanish) measure of precious metal.

Fiat money is money imposed by the State. Sometimes the king merely
ratified the prevailing currency and was satisfied to put his royal
or imperial likeness on a measure of coined precious metal to
"guarantee" its value. Actually, the value was rubbing off in the
other direction; how many rulers were as "good as gold?"

Rather than guaranteeing the value, beginning at least in the Roman
Empire, the rulers debased the coins by alloying with base metals or
"clipping" the edges of the coin so that less-than-expected weight
(mass, actually, for the sake of purity) was tendered in exchange.

Without going over the long history of money in detail, it is fair to
say that the relationship between State and money is corruption and
fraud. If money is the root of evil, the root of evil money is
government.2

Fiat money is money imposed by fiat. It is neither voluntary nor
spontaneously generated in free trading between consenting adults.
The United States alone has had several severe inflation bouts
through fiat money, beginning with the "Continentals" of the
Revolution. There is also a strong link between war and inflation:
the Continentals, the Greenbacks of the Civil War/War Between The
States, severe inflation of World Wars I and II, Korea, and Viet Nam.
This is not a coincidence, Inflation is a form of taxation and
fighting wars needs lots of taxes.

Like taxation, inflation must be enforced. The mechanism of
imposition of fiat money is the legal-tender law. One must accept the
debased government paper certificates allegedly representing money or
face legal penalty.

In Nationalist China, just before the collapse of its control over
the mainland, the inflation of currency was so severe (to finance the
Chinese Civil War) that merchants defying the monetary and price
controls were lined up and shot by officials of Generalissimo Chiang
Kai-Shek. Mao Tse-Tung promised gold and won over the small
"capitalists" to his Communist regime.3

150

If traders would risk death rather than take inflated fiat money,
then the link between hyperinflation and revolution (or at least
drastic changes in government) is not coincidental. Failing a general
upheaval, the Counter-Economy is strongly stimulated by strong
inflation. (Price controls, often used to combat inflation--like
holding down the mercury in a thermometer to combat fever--turn
almost the entire market into a black market overnight.) Gold
hoarding is common among even poor people in European and Latin
American countries with repeated bouts of hyperinflation.

North Americans are the most complacent people on the globe about
accepting fiat money as real money. One of the reasons is that the
last collapse of the currency was two hundred years ago in the U.S.
But the current escalating debasement of the American dollar is
shaking that trust and the flight to legal gold, foreign assets and
foreign currency, and counter-economic substitutes is accelerating.

Although there are a few secondary factors (which can be mostly
eliminated by long-term averaging), the "price of gold" has not gone
drastically up. Gold is the most stable medium of exchange possible.
The price of the dollar in terms of gold has dropped drastically. In
terms of the original gold weight definition of the dollar (used
throughout the prosperous, mostly hardmoney century from 1814-1914),
today's dollar is worth three cents to a nickel. If any of you
remember that at the turn of the century a beer with a free lunch
cost four cents, you can see the price ratio is still in line.

It is fairly obvious that if people are free to choose their own
money as some economists have recently suggested4--that is, people
are free to refuse one form of money and contract for payment in
another--then either the government will behave itself and simply
superfluously certify the measure of the money (which can always be
checked by physical and chemical means) or government money will be
discounted and Gresham's Law will take over.

Gresham's Law has usually been stated as "bad money drives out good."
(The "good" money is being hoarded and the "bad money" is given in
payment and

151

thus predominates in circulation.) This ends with the "Crack-Up Boom"
when the "bad money" is worthless and only "good money" is left.

The nature of inflation, then, is that it is a form of theft by the
rulers of a country.

The money supply is first controlled by the government, and then the
State increases the number of units by various bookkeeping
manipulations.

More dollars chasing the same amount of goods is inflation in a
nutshell. It does have other effects, but, save for a privileged few,
they are overwhelmingly negative to most values of most people. In
order to realize the apocalyptic nature of inflation and the
growingly countereconomic survival movement, a quick sketch of the
long-range, cataclysmic effects are needed.

Inflation and Survivalism
-------------------------
Inflation causes depressions; depressions motivate greater inflation.
The spiral repeats until a critical point at which the money system
collapses--the "CrackUp Boom" of Ludwig Von Mises. A recent dramatic
example was Germany in 1923. The discrediting of the governing
political parties led to the National Socialist takeover and the
Third Reich, an event most would consider cataclysmic.

It seems paradoxical that many apparently level-headed investment
advisors, market analysts, gold bugs, and such are heavily committed
to "end of the world" doom "n" gloom scenarios. The above sketch
explains why.5

Survivalists see a general, world-wide runaway inflation and collapse
of the money supply. Extrapolating present conditions along
historically verified economic lines proves them right. And so they
store gold, silver, and commodities in out-of-the-way foreign places
or in the North American wilderness.

The Survivalists are often willing to evade and break laws and
controls. After all, if the end of the world is coming--and the
government is responsible--why should the State be obeyed? And so
they take the step into the Counter-Economy.

152

Typical counter-economic acts by Survivalists are tax evasion (of
course), currency-control evasion (to store their money safely and
undisclosed in foreign banks), building-regulation evasion (for
survival retreats), gun-control evasion and drug-control evasion (to
stock their retreats), contraband smuggling (if they wish a foreign
retreat), and evasion of all compulsory disclosure laws. This last
one is necessary; if the government can reach you, your money, and/or
your survival retreat when the crunch comes, what good were your
preparations? No survival results.

By laying in gold and goods--and even the poor can do it6--the move
to a counter-economic money system was facilitated. It only took
someone to realize that one need not wait for the eventual collapse
to replace the money that the gold bugs and survivalists (now in the
millions), at least, realized was forcibly imposed, intentionally
debased, and far less preferable to top commodity alternatives. And
so the Gold Bank was introduced. And since some of its
operations--even with Browne's intersticing--skirt the laws, and all
of them will be declared illegal when the inflation goes runaway
(judging by most historical accounts), the Gold Bank must be
counter-economic. And it is.

There is always the possibility that the government will come to its
senses and stop inflating. That hope was, at least for North America,
crushed by the election and "sell-out" of Ronald Reagan as president,
generally considered the hardest "hard money" advocate who could
possibly get elected to power. His Gold Commission refused to back a
gold standard for the American dollar, and, as this is penned, the
money supply of the United States is being pumped up for the next,
higher than ever, turn of the spiral. The demoralization of the
moderate gold bugs may actually be enough to set off the flight into
real goods at this cycle.
(See footnote 5.)

It may surprise some to find that the Counter-Economy actually offers
considerable hope. The money supply could be replaced--illegally but
peacefully--before the severest dislocations of the Crack-Up Boom.
How it is being done (and how you can participate) will be spelled
out from the real-life example after one last preliminary.

Counter-Economic Money
----------------------
153

Ordinary people need protection against inflation. It hits everyone
(no one can actually obey all laws since many contradict each other).
Counter-economists (those described in previous chapters and
following chapters) need a safe currency. What does that mean?

"A banker and three others were convicted Tuesday of participating in
a scheme to launder drug money through Garfield Bank". A federal jury
deliberated less than two days before finding the four guilty of
conspiracy and failure to comply with laws requiring banks to file
reports on deposits of more than $10,000."7

All counter-economists need ways of conducting financial transactions
free from the prying eyes of government in order to lower their risks
considerably. In order to evade income disclosure, most are tax
evaders as well. Some solve the problem by buying banks.

"John A. Gabriel, a former president of the [Garfield] bank and
chairman of the board, was indicted along with the others in July. He
pleaded guilty on charges of failing to report nearly $500,000 in
currency transactions. Gabriel and the bank have paid the government
nearly $2.3 million in fines."8

Owning a fiat bank operating counter-economically is useful, but not
much more risky than operating a gold bank. Gold also has the
advantage to drug dealers, smugglers, and all sorts of
foreign-operating counter-economists, of being a far more universal
medium of exchange than even the dollar.

"Black market gold in Moscow now brings prices equivalent to $2,400
an ounce--close to four times more than current world rates,
according to sources familiar with the trade. In other parts of the
country, such as Soviet Central Asia, prices are reputed to be even
higher."9

Soviet fiat money is the most rigidly controlled. Is the ruble
inflating? "Inflation also hits the black market. One source said a
five-ruble Czarist gold coin that cost the equivalent of $100 on the
black market in the 1960s now goes for close to $400. Even gold tooth
fillings can be unloaded at premium prices."10

154

In other words, all the reasons for counter-economic money in North
America applies to darkest Russia. "People who have acquired money
illegitimately are understandably reluctant to put large sums in
state-controlled banks for fear of unpleasant questions. Keeping huge
stores of money at home is also dangerous.  Since the 1917 Bolshevik
revolution, the national currency has been changed several
times--with the "old money" becoming worthless after every reform".

"Anyone who doesn't want to have to account for how he got his money
might well tend to put his money into gold," said a Moscow writer who
asked not to be identified. "That way, it's always safe" The black
market offers no-questions-asked confidentiality."11

The collapse of Cambodia shows both the universality of gold and its
function of redeemer during economic collapse. "Despite a ban by
Thailand on cross-border trade, the river of gold that began flowing
from Cambodia in 1979 with the first wave of starving refugees
continues, fueling a black market that distributes scarce goods
across Vietnamese-run Cambodia and pumps millions of dollars into the
Thai economy. "Business is better than ever," one Cambodia trader
said of the unofficial "metals market" operating at Nong Chan, one of
several unofficial refugee settlements straddling the border."12

The relationship between risk and profits--the basis of
Counter-Economics--is starkly visible from the relation between gold
price and distance (to perceived danger). "At tiny stalls in Nong
Chan and similar border camps, such goods as soap, flashlight
batteries, pens, and rice sell for only slightly more than they do at
the nearby Thai market-town of Aranyaprathet. As the goods travel
deeper into Cambodia, the prices rise accordingly, observers said".

"It's a dangerous trip back (into Cambodia) so these people want a
good rate of return," [one Western diplomat] said, adding that some
of the goods actually find their way to Vietnam."13 Perhaps the
Counter-Economy has its own version of revenge.

Earlier it was put forth that inflation is a good consciousness
raiser--or countereconomizer. How about the monetary-collapse-caused
black market of Thailand? (We know the Cambodians are radicalized. )

155

"Thai government efforts to stop the black market have angered Thai
villagers, who say the trade is as active as ever but is reserved for
the military. "If you go to the border to sell to the Cambodians and
the soldiers take your things, sell them and pocket the money in
front of you, how can you feel?" one Thai trader asked.

"Before the black market, people liked the soldiers," he said. "Now
90% of the people fear and dislike them."14

Even with all this gold, banks are used. "the diplomat said recent
daily fund transfers from Aranyaprathet to Bangkok at one Thai bank
had risen from a pittance before 1979 to $500,000."15 One needs banks
for two reasons: conveniently to handle large sums of wealth and to
interface with the abovegroun d or white market.

Actually, there are other ways of handling large wealth
counter-economically.  Drugs such as cocaine and gems are easy to
smuggle and conceal. The interface with the rest of the market is far
more valuable to most large-scale countereconomists. The rich ones
simply bribe their way into seemingly legitimate banks.

So what does the poorer and middle-class counter-economist do?

Convenient Gold
---------------
Fences, money-changers, and other middlemen have dealt with the
problem of "laundering" black money into white. When money itself is
the problem, one needs to keep most of one's money black (in illegal
or soon-to-be-illegal hard money). One can sit on contraband goods,
taking the additional risk, and converting one's assets when the time
comes. Many survivalists find that fits nicely into their plans.

Suppose you could deposit fiat money in what appears to be a bank.
This counter-economic bank converts your deposit into gold and holds
the deposit in gold, safe from government ravages. Got a bill to pay?
Write out a "check" and the Counter-Economic Gold Bank (C-EGB
henceforth) turns gold into dollars at today's price and sends along
an ordinary bank check with your paperwork. Got

156

a counter-economic bill to pay? Write out a gold check to your
trading partner who can collect gold from the C-EGB or have it
deposited to their gold account without going through dollars at all
or having any external evidence of transaction.

Such a description is not only a full counter-economist's dream but
that of any part-time retreatist, survivalist, gold bug, or even
inflation-ravaged widows and orphans. It's here already, at least in
ahead-of-its-time Southern California.

The Counter-Economic Bank
-------------------------
The Counter-Economic Gold Bank is an honest-to-God innovation. Many,
if not all, of those designated "the world's oldest profession" are
counter-economic, but C-EGB is really something new. The rise of
Information Counter-Economics has something to do with it, but to a
large extent it owes its existence to greater understanding of
economic theory combined with counter-economic action (see last three
chapters).

Banks--or even near-banks--are tricky to get going. Confidence and
trust must be earned, painfully and slowly. Since the consciousness
increase of 1972, several have tried and failed. One, however, has
succeeded and after 16 years of continuous operation is now the
financial center of several "free-market businesses" including
printers, typesetters, leather goods manufacturers, computer
consultants, and several new businesses starting up at any time. We
will return to this "Agorist Community" near the end of the chapter
and in more detail on its operation near the end of the book.

This particular Counter-Economic Gold Bank will be called A&Co.
Because of the laws concerning bank chartering (the government keeps
tight rein on banks), A&Co. never calls itself a bank in its
introductory literature but simply refers to itself as "A Free Market
Business Trust" and operates openly but not obtrusively.

A&Co's main explanatory booklet of its operation has some euphemisms
but straightforwardly calls the book Current Gold Accounts: A Free
Market Money Instrument. After two pages of introductory economics of
inflation, Current Gold Accounts gets right down to specifics. Money
is defined in grams of gold (one

157

troy ounce equals 31.10 grams). Up front, A&Co wants a contract
signed with the account holder.

The mechanics are simple and precise. "The deposit-payment exchange
rates for current gold accounts are:

* currently determined once a day, when gold markets are open, at
  1:45 P.M.  When our volume permits, we'll determine the rates more
  often during each business day;
* maintained at a 1% spread and
* based on the lowest premium gold coin available, which sometimes
  produces deposit rates at a discount from gold bullion and payment
  rates at a premium over gold bullion.

"Current gold accounts presently earn 1.0% pa [per annum], payable
monthly, on balances between 100 grams Au (Au is the chemical symbol
for gold) and 400gms Au; amounts over 400 gms-Au do not earn interest
at this time."

A&Co explains they accept deposits in gold pieces, federal reserve
notes (dollars), postal money orders, and "dollar instruments (bank
checks, money orders and so forth)." A of A&Co and others have
personal checking accounts (they explain freely) to deal with the
instruments.

Deposit slips are simple and one can either fill out gold directly in
grams (if that is what is what is deposited) or in dollars and A&Co
will insert the exchange rate, convert the dollars to gold grams, and
send you your receipt with the final figures.

Gold may be deposited in any form. Gold will be paid out on demand in
Austrian 100 Corona coins (30.5 gm). Since it is difficult to get
"small change" in gold, one of the obvious advantages of a C-EGB is
to poorer people who can now "speculate" in gold by depositing it in
an A&Co account in dollars for conversion, and converting it back at
a later price and time. Any and all dollars are acceptable.

158

(In case it is not yet obvious, paper money benefits the rich with
government connections. Gold is the primary defense of the powerless
poor. Long-standing propaganda to the contrary is clearly
self-serving to certain interests. It is strongly in the interests of
the rich and powerful beneficiaries of inflation to make gold
difficult to obtain and transact.)

By the eighth page of Current Gold Accounts we are half-way through
and the most complicated procedure is explained. The checks of the
gold bank itself are called "transfer orders" and one may write one
to another member of the bank to transfer either gold or dollars. The
only complication is, as was mentioned in the previous section, in
transferring payment to the "outside market," that is, interfacing.
A&Co, quite reasonably to gain consumer interest, undertakes the
effort involved. One sends A&Co the transfer order and bill and they
send out an ordinary, regular-bank check with your paperwork.

When sending instructions to us to make payments from your gold
account, include:

* an invoice, bill or some other form of explanation of the payment,
* a transfer order for each payee with full instructions, such as
  name of payee, amount of payment and form of payment if different
  from commercial bank check and
* an unsealed envelope stamped and addressed to payee.

If any of these items is missing, we'll still process the payment but
charge a reasonable fee for the extra handling.

What could be simpler? Examples are then given, including the
gold-to-dollar calculations. A&Co points out that it may take them
one to three days to handle the more complex transactions. It is next
noted that accounts are turned over once a month (usual for most
banking type operations).

159

The remainder of this simple booklet gives examples of procedures,
sample calculations, and a list of benefits. One benefit is avoiding
capital gains penalties for those reporting income. This deserves a
little more coverage. If one has bought 20 grams of gold for $200 and
later sells it for $400 to pay some debt, one could (if reporting it)
end up paying taxes on the gain of $200. But since the dollar
declined to half its value in reality rather than gold doubling its
value, one actually preserved one's wealth, nothing more. Yet one
will still be liable for taxes on this illusory capital gain.
Although hard-core counter-economists would not report themselves to
taxing powers, soft-core or grey-market countereconomists might wish
to "cover themselves." A&Co gives a service, then, to these halfway
people as well.

Privacy is another benefit with obvious counter-economic
implications. A&Co also mentions their minimal charges, paying
interest in gold, and having a simple way to buy gold without the
high premiums charged by coin dealers for small purchases.
Characteristically, the last benefit they mention is "support of the
free market."

A regular newsletter issued by A&Co is the Free Market Advertiser,
which publishes the gold/dollar exchange rates they use over a month,
publicizes associated counter-economic businesses, and publishes
their reports to shareholders. A&Co also maintains a small stock
exchange for these businesses.

These people know what they are doing and why. Economic and
ideological articles and editorials on the virtues of the pure free
market and attacks on the immorality of State taxation and regulation
abound. Their consciousnesses have been raised.

Problems of the Counter-Economic Bank
-------------------------------------
Many will find it amazing that something as organized and
sophisticated as a bank (not to mention embryonic stock exchange) can
operate as if in anarchy--with no government. The high probity of the
principals of A&Co--nonsmoking, non-drinking, and so on--certainly
belies the black-market image, yet they do not discriminate against
"looser" countereconomists.16 As long as they

160

add their bills properly and pay them, all are welcome. Needless to
say, the bank is a main source of investment capital for local
counter-economists.

A theme that should have been noticed already in this book is of the
relative impotence of government. Law-enforcement is helpless in even
the most totalitarian dictatorship when laws are not strongly
accepted and enforced on people by themselves. Even when
everyone--including counter-economists--agrees with the wrongfulness
of an act (such as murder or theft), the State's own statistics of
apprehension hit a high of only about 20%. (That is, over 80% of true
criminals in the worst crimes get away from the inefficient
government apparatus.)

One important factor in minimizing the risk of state interference in
one's activities is the tacit or stronger support of everyone
involved. In the case of the Counter-Economic Gold Bank, it gives
strong, continuous benefits to those with whom it does business. This
is at least as important as ideological exhortations to remain loyal
and the potential ostracism of one's trading partners and customers,
should one report the activities to the State. Perhaps the State
could offer a high enough reward to convince some to turn
stool-pigeon but that has yet to happen after seven years and
hundreds of people aware of the nature of the activities.

And as this free market expands, the benefits involved in it grow,
and the reward or bounty needs to get higher and higher until the
State can no longer raise enough to crush a significant part at all.

A particularly sensitive problem for Inflation Counter-Economics,
though common to all, is the flow and storage of information.
Publicity and advertising is good for business; regular financial
disclosure builds trust, confidence and more business, yet the more
information about countereconomic activity is disclosed, the greater
the risk that even Keystone Kops will accidentally trip across it,
realize what is going on, and act to stop it.

Fortunately, at the same time that the counter-economy is getting
more financially sophisticated, information technology is
experiencing breakthroughs in storage and transmittal which are now
completely free of unwanted intrusion.

161

The next chapter looks at the rise of Information Counter-Economics.
If Inflation is the Great Counter-Economizer, then the Information
industry explosion is the new shining, white-knight defender of the
Counter-Economy.

Barter Counter-Economics
------------------------
Bartering has become a recent fad and its motivation is largely tax
avoidance and inflation evasion. A recent book actually claimed that
openly trading without money was the new "underground" or
"subterranean" economy. The truth is almost the opposite.

Reported bartering is taxed. Most of the new, big, barter networks
with computer accounting and high-profile advertising disclose their
transactions to the Internal Revenue Service or its equivalent in
other countries. The IRS assigns a value to the goods exchanged and
demands taxes on the income. Sales tax may or may not be collected in
the various localities and so on. Even where taxation is avoided in
part, the governments at the appropriate level can pass new taxes on
the transactions whenever they wish.

There are other advantages to open bartering such as those for
cash-poor companies but as we have seen at least sketchily earlier in
the chapter, the use of some form of money to mediate exchange is
highly profitable. It is no accident that businesses keep discovering
that they have barter credits, yet can't find what they need to
purchase while many goods offered go untaken.

Counter-economic bartering has quite a different function. The
current dollar (or gold or whatever) value of the goods are
acknowledged by the trader and cash often changes hands
surreptitiously to make change.

The Barter Book of 1979 spells out several straightforward rules for
engaging in barter, all common-sense, but two in particular are
blatantly counter-economic:

"They [barterers who are named] use direct exchange. They never get
involved with third-party barter. They have heard of barter-credit
systems and barter clubs, but they are not interested. If the premium
were on efficiency, they would use money.

162

"They reap tax advantages. They do not record their loose,
unstructured, friendly wages."17

Without high taxation and ever-higher inflation of paper money, the
inconvenience and expense of abandoning the medium of exchange would
quickly rule out bartering for most busy people. The 1981
"free-enterprise scare" of Ronald Reagan's election and early
administration--with people anticipating (wrongly) a fall in taxes
and inflation--caused barter exchanges to fail or suffer loss of
customers. Vigorous, publicized IRS attacks on them quickly wiped
them out.

Counter-economic bartering goes on but as a better way becomes
apparent (goldbanking convenience) it will make way.

Still, even barter Counter-Economics would be immensely facilitated
and approach the finetuning convenience of money-use with the
introduction of computer nets. "Money is information" has already
become a cliche. If everyone joined at least one computer network
which linked with all the others, it would, at least in theory, work
as fast and conveniently as using money. And the rise of Information
Counter-Economics may allow just that.

Even in that ideal outcome, there would be no reason not to run the
accounts in units of gold mass simply to include all the hold-outs
and curmudgeons and those without computer hook-up or between such
hook-ups.

Preliminary negotiations have begun with A&Co to issue the first
countereconomic credit card (a Bank AnarchoCard ?). It is no
coincidence that those offering the service are computer consultants
and programmers.

Footnotes
---------
1. A recent book, How To Prosper In The Underground Economy by Larry
   Burkett with William Proctor (William Morrow & Company 1982),
   completely misses this point. There is nothing "underground"--or
   at least counter-

163

   economic--about barter dealings when books are open to the
   Internal Revenue Service.
2. A lot of literature has recently been published on the nature and
   history of money, from strident pamphlets to exact but opaque
   economic analyses. One of the most precise, easy, and enjoyable to
   read is still What Has Government Done To Our Money? by Dr. Murray
   N. Rothbard, a former student of Ludwig Von Mises and a rare
   economist not serving the interests of any government or would-be
   government.
3. As related to the author by Economist-Historian Professor Murray
   N.  Rothbard, PhD.
4. Nobel-prize-winning Austrian economist Friedrich Von Hayek now
   suggests competing currencies be allowed and money
   "denationalized" by the State.
5. Most Austrian-economic-based writing has explained the business
   cycle in detail since the landmark publishing of Von Mises's
   doctoral thesis: Theory of Money And Credit (1910). It explained
   the Great Depression 19 years before it happened. Here's a longer
   sketch for those who wish to avoid looking up references:
   Increasing the money supply gives the first recipients in line
   (government rulers, banks, contractors with the government) more
   purchasing power. They bid up certain resources at the old prices
   and signal the producers to produce more because the producers
   think they can make more money.  Eventually there is a general
   price rise, people find they can afford much less with the same
   money and cut back on their spending. Over-invested businesses
   that had increased production now get signals to reduce output,
   and liquidation ("fire sales" to "going out of business sales")
   and layoffs occur. This unemployment and capital loss is called a
   depression (or recession or other euphemism such as "rolling
   readjustment"). It could end there but the panicking bankrupt
   businessmen and unemployed laborers call for more money to solve
   the problem. The government obligingly prints more. But, to trick
   the market again into the first boom (or another like it), it has
   to print more than expected. (After all, everyone's already seen
   the prices rising, assume they will continue to rise at the same
   rate, and discount the money accordingly.) Eventually, the people
   catch on that they will be tricked again and anticipate any hike.
   At that point, the money is spent as fast as it is received (what
   Mises called the "flight into real goods"), workers are paid two
   or three times a day, debts have to be refinanced daily or even
   hourly. Finally, people throw away the worthless money to use
   foreign currencies, barter, and gold. This is the Crack-Up Boom
   ending runaway

164

   inflation. There are several historical examples of it and it
   sounds inevitable.
  
   Chile broke the cycle by means of a severe military dictatorship
   in 1973. For a fast-paced fictional account of a Crack-Up Boom in
   the United States in the near future, see Alongside Night by J.
   Neil Schulman (Ace Books, 1982; Crown 1979). Schulman is in full
   understanding of the theory of Counter-Economics (agorism) and his
   plot is resolved with the upbeat ending of agorist triumph.
6. See The Alpha Strategy by John Pugsley for useful details.
7. Morain, D. (1981, December 16). 4 guilty in money-laundering
   scheme. Los Angeles Times, p. II3.
8. Ibid.
9. Kent, T. (1980, September 4). Black market in gold thrives in
   Russia.  Associated Press.
10. Ibid.
11. Ibid.
12. Wary gold dealers fuel black market: Thai sellers often dress in
    rags. (1982, January 10). Los Angeles Times, p. II-7.
13. Ibid.
14. Ibid.
15. Ibid.
16. Hargis, A. L. (1981). Current gold accounts: A free market money
    instrument. Costa Mesa, California: Anthony L. Hargis & Co., A
    Free Market Business Trust. Editor's Note: SEK3 obscured the name
    as "A&Co." at the time of writing to protect ALH&Co. from
    unwanted state interest. Alas, the activities of ALH&Co. came
    under scrutiny in 1996; in 2004 the company's assets (i.e.,
    customers' gold and regular-bank deposits) were seized by the
    IRS. Anthony L.  Hargis was imprisoned for contempt of court
    after refusing to turn over his records. See: Kristof, K. M.
    (2004, March 10). U.S. sues O.C. man in tax scam.  Los Angeles
    Times. Retrieved from
    http://articles.latimes.com/2004/mar/10/business/fi-taxscam10.
17. Simon, D. A. (1979, October). Bartering: The tricks of the trade.
    Cosmopolitan, p. 226.

165

6. Information Counter-Economics
--------------------------------
Information exchange divides the Counter-Economy from the
Establishment white market. Consider the elementary difference
between a street deal with and without the watchful eyes of State
agents. Or consider a ship docking, unloading its goods, accepting
payment, and sailing off. In one case, the forms were filled out and
the imports registered with the government; in the identical case
physically--but not informationally--no papers were filed with the
State and its agents remained unaware of its existence. At the stroke
of information exchange, contraband was created and the crime of
smuggling occurred.

Control of information is a battle over the State's very ability to
function. If you could cut off all information flow to the
government, it would be unable to act.

Strangely, the United States government recently threw in the towel
over information-industry regulation. And yet conflict remains around
the fringes, especially over the powerful computer programming method
known as public key cryptography.

Should cryptography succeed, the long-awaited dream of workable
anarchy has arrived. To understand the full impact, let us look at
how the State works, or, rather, how it steals.

Plunder Through The Ages
------------------------
In the beginning, the State was a gang of bandits, terrorizing the
countryside.

Taxation was simple; the horde seized anything that looked valuable,
ate anything that looked edible, and raped anything that looked
appealing. To beat the barbarians, the smart peasant hid his gold,
his daughters (and sons), and his livestock. To discourage this
cut-off of information, the horde often burned down the villages when
they had taken all they could find.

Where the plunderers settled down to become a proper government, they
restrained their appetites and exacted tribute that left the peasant
with just enough to live on and grow another crop next year. Priests
were bought to convince the producers that the State had divine
approval. And by the Middle Ages the Lords settled for only the first
night with the peasant bride (droit du seigneur).

166

The main form of tribute evasion remained underreporting of assets.
But as the market grew more complex, some business activity
underreported its very existence. The informer is looked on with
greatest disdain and fear from the schoolyard to the prison yard. The
"stool pigeon" receives an automatic death sentence from violent
gangs (themselves embryonic states); nevertheless, informers are
shunned by moral, peaceful counter-economists.

American society of the twentieth century is riddled with informers.
Just to keep some perspective, anyone in the USSR not an informer is
being informed on.

And even the informers are informed on. One's safest course is to
discover one's informer and then select their information carefully.

The drug industry is riddled with DEA and local police informers.
Gun-runners run free until the BATF gets an informer in their midst.
Political dissidents often have more dues-paying members from the
Federal Bureau of Investigation than from committed members. The
Federal Trade Commission depends on sore-loser competitors to
denounce a company for anti-trust violations.

And above them all, with a network of spies, informers, disgruntled
competitors, vengeful spouses, spurned lovers, and straight-out
bounty hunters, stands the Internal Revenue Service. No legal agency
of state enforcement excites the dread and fear as that of the IRS.

The IRS is the raised sword and mailed fist of the State. While the
rest of the State camouflages itself with the appearance of good
works, attempts to cosmeticize the taxman inevitably fall flat. A
popular bumper sticker says it all:

"IRS: It Really Steals."

How Taxation Works
------------------
In the modern world, IRS agents cannot, much as they may wish, mount
their sweat-soaked stallions, draw their morningstars and maces, and
ride shrieking through the peaceful suburbs in search of wealth for
the Director. Then again, they have an advantage over their spiritual
ancestors of three millennia ago.

167

Their victims turn themselves in.
---------------------------------
Three thousand years of mystification pay off every April 15 in the
U.S. (April 30 in Canada, various spring days in other countries).
American citizens are asked to send in the very information the State
needs to know. The exact amount doesn't matter; the deductions are
window-dressing.

The stark truth is that, without that volunteered information, the
State would have no idea where the wealth is.

It is no new observation that if everyone stopped sending in their
1040 forms the State would dry up and blow away. The counter-economic
insight is that anyone can (and does) do it without waiting for
everyone else. The technique is to control the information flow about
oneself; in particular, the information flow from you to the State.

Visibility and Profile
----------------------
There is not just one way to use information to free one from State
predation.  There are three ways. Two of them assume you are acting
relatively alone, the third assumes the opposite.

Most people are familiar with Low-Profile tactic of being "invisible"
to the IRS and other government agencies. The rest of this chapter
will focus on that method. What should not be forgotten are the other
tactics, especially as they have higher payoffs (and correspondingly
greater risks).

High-Profile Counter-Economics deals with a particular area of State
coercion by calling attention to his or her victimization. The more
noise, the better. The famed Chicago 8 used publicity to keep
themselves out of prison for years--even after their convictions.

Civil disobedients trust public pressure to keep them out of jail or
to minimize their penalties. Indeed, the State's enforcers are wary
of creating martyrs. The very concept of martyr exhibits the power of
Information; what is a martyr but a corpse with a good story?

168

High-Profile Counter-Economists have higher risks because they are so
easy to detect. They gain the advantage of additional information
flow--from themselves to the rest of the market. To the extent they
succeed, they become inspirational.

Actually, this author has proven that it is possible to pursue the
advantages of both High Profile and low visibility simultaneously.
The trick was to create a third category: The CounterEconomic
Community.

One may pursue any degree of notoriety (or, to put it another way,
freely advertise one's services) within the community of fellow
counter-economists while not informing the State, its agents, and, of
course, its informers. To do that, one needs to control the flow of
information about oneself.

Information Flow
----------------
Ever notice that after you order something by mail, or contribute to
a charity or politician, your mailbox is suddenly flooded with
associated solicitations? You have generated outward information flow
and were rewarded by an inward torrent.

Information is the raw resource of a burgeoning industry, including
data processing and much of computer programming. Information theory
is a hot academic field. This is such a fast-changing business that
the American government threw up its hands in its attempt to regulate
it.1

Setting the discussion of higher technology to the side briefly,
there are two obvious ways to escape the State's notice: don't exist;
if you do exist, don't tell anyone about it. (There is also the
agorist procedure: tell only fellow countereconomists who have as
much to hide.)

Some counter-economists go that far. They cut themselves off from
contact with anyone who might get to know them, get and stay off all
mailing lists, operate through cash and never use banks, and even
avoid legal residences, living in trailers as nomads or on neglected
land in caves or makeshift structures.

169

Briefly, in the 1960s, these early self-conscious counter-economists
(protoagorists, one might call them), were organized enough to
publish a newsletter, Vonulife. (Vonu, they said, was invulnerability
toward coercion, and that is what they sought.) They had some obvious
problems with maintaining contact and have largely vanished today.

But not before they had made rudimentary attempts at solving the
problem of beating the State and remaining part of society. After
all, the State and human society are natural enemies; it should be
possible to use society as an ally against the State. (Remember the
social standing of snitches?)

They called the concept of interaction with the rest of society
(those not "vonu") interfacing. This was brought up last chapter in
our explanation of countereconomic banking, and that was one set of
examples.

One way to interface with the rest of the economy, especially the
White Market or Overground or Establishment Economy, is to create
another identity. Let this fictitious individual take the risks; you
can drop the identity when it appears to be near apprehension.

There are some serious problems with The Paper Trip2 approach. To put
it simply, if the State's agents are closing in on this alter-ego, as
long as you wear the guise they are closing in on you.

Also, once you "shed the skin," you lose everything that went with
it: accounts, contacts, acquaintances, and property stored under that
name. It is a smaller loss than arrest and possible imprisonment, but
it is no solution.

Multiple identities--if you can keep them straight--are an improvement.

The answer is not to abandon secondary identities nor to depend upon
them. The technique is best used as a back-up--anti-arrest insurance.
And using some sort of dummy company or identity is inescapable for
counter-economic real estate.

170

This leads to the natural categorization of information flow into a
system of layers. With each layer, there are appropriate
counter-economic techniques, some long-standing and successful,
others yet to be developed by bright young innovators.

Inner-Layer Information Flow
----------------------------
The innermost core of information about you is made up of you and
your intimates. Some people need work on themselves--learning when to
say what to whom. And selection of one's spouse and family on the
basis of their discretion may appear a bit unromantic or biologically
restrained. Fortunately, a long-standing tradition in many families
of keeping sensitive information "in the family" works in one's favor
here.

The next layer is that between you and your friends and distant
family. Notice how inquiries about income and business practices are
considered bad taste socially. Perhaps that is an indication of
society's natural evolution toward agorism.

The final inner layer may be the most risky: customers, clients,
suppliers, and partners who not only know something specific about
you but, if you get too close to them, they are in a position to have
the "second two" to put two and two together.

There are two useful techniques to control this information flow; one
is to follow the useful social rule against mixing business and
pleasure. This must be done carefully so as not to excite suspicion
that you're hiding something--a tantalization that few can resist
probing. This technique leads to putting your commercial associates
in the next layer.

But there is another technique: swap risks. If you have something on
them, you are far less worried about them finding out something on
you. This is a form of swapping of intimacies, so, as in romantic
relations, choose your associates carefully.

171

"You mean you're Counter-Economic, too?" may well be the most common
sigh of relief in the 1990s.

Middle-Layer Information Flow
-----------------------------
Innermost of all commercial information are your records. Who,
besides you, should see your books? If all goes well, no one
should.

Nor, with all the trust in the world, is there a good reason to give
others so much access to your information flow that they are able to
piece together your books like a jigsaw puzzle (e.g., forensic
accounting). It is possible you may need to open your books
concerning a specific venture or one of your business enterprises if
you involve others in investment; this can be handled
countereconomically.

Such enterprises are useful for distancing yourself from unfriendly
information gatherers by adding an extra layer for their penetration.

The middle layer (a mesosphere, the scientists would call it) of
information flow is the interesting part. Here is where your casual
interactions with others lie.

An obvious virtue or good habit to develop is never to reveal
information pertaining to your counter-economic activities,
or--before you do--you consciously consider the consequences. "Talk
to you tomorrow about that, Jane; I've got to check something first,"
gives you 24 hours of risk-weighing.  Still, if you are going to deal
with the rest of the world, you must reveal some information: that
you have a product or service, how much it will cost, what you will
accept in payment, how you can be contacted, and when are you or it
available. If there are multiple payments, credit arrangements,
repeat business, and post-sale follow-up involved, still more
information must flow from you.  And toward you as well. Another good
technique is the information swap. As you reveal something, you learn
something from your supplier or customer.

172

If you discover your counterpart is also counter-economic, keep the
relief somewhat contained. You still need to find out how
counter-economic. After all, there are counter-economic cops and even
IRS agents! Everyone breaks laws some of the time; it is impossible
not to.

But that works for you more than against you. For if it's not obvious
that your client or tradesman is counter-economic, you have to make
the step yourself to cross the line. And since everyone is somewhat
counter-economic, it is not obvious that you are suggesting anything
out of the ordinary except in this limited case.

This is far easier than it sounds. Hundreds of times this author has
gone to printers and suggested they don't waste receipt papers and
drop the sales tax.

Refusal came only when the mistake was made of talking to a
nondecisionmaker. Beware even the smallest bureaucracy. Cabbies in
New York will offer to leave the flag up if you don't look too much
like a law enforcer--and if you ask first, jump at the offer.

At least at present, North American society has pressured the
government court system to frown on entrapment. It will change, but
while it's in effect, it is a great boon for Counter-Economists
breaking the ice.3

Personal contact has the advantage of allowing a counter-economic
courtship rite. But there is a corresponding giveaway of information
about you by allowing another's observation. It's a trade-off. As
always in Counter-Economics, you must weigh the risks against the
benefits in each particular situation.

Consider, then, the benefits of impersonal contact from advertisement
and word of mouth, correspondence, delivery via (possibly
counter-economic) couriers, and payment by mail, courier, or even
through counter-economic banks. At this point, it's time to haul out
the computer.

Computers for Counter-Economics
-------------------------------
Consider the following scenario: Someone in the market for, say,
custom footwear, consults a list of products. Seeing the category of
footwear, she calls up

173

a list of suppliers. One of them happens to offer fancy work and
gives an access code. The code is activated.

A list of offerings appears. She requests something not quite on this
list, say, a pair of high deerskin boots with elvish runes stitched
in, suitable for a fantasy convention or Society for Creative
Anachronism gathering. A sketch appears of such boots, with
specification numbers and costs, depending on type of trim.

The order is placed and a deposit agreed upon. The deposit is
transferred via the countereconomic bank (or maybe to a mail drop).
The boots are delivered, found satisfactory, and the balance paid.
Neither party to the transaction has revealed herself to the other.

Anyone familiar with today's computer technology knows that not only
is all this feasible but already exists, in whole or in part, in most
major cities and university towns.

Imagine further that you can keep your records in books under a
complicated code that would require more trouble than you're worth to
crack. And that you can advertise on the computer bulletin board with
similar codes and contact and be contacted through such codes.

Again, the technology is available, or, as the hackers say, "on line"
It's a dream come true for Counter-Economists: a nightmare in the
making for the IRS and the government's regulators and controllers.

The "key" is Public Key Cryptography. The National Security Agency
(NSA, colloquially known as "The Puzzle Palace") hates it and is
working on cracking the systems and getting businesses and
bureaucracies to agree to a standardized system they can easily
crack. It should be kept in mind that cryptography is a dynamic,
evolving system. It is a non-violent form of an arms race where one
side cracks the code and the other develops a new system to top the
old one.

Those considering using this should check the current literature and
talk with computer-hip friends. (The usual problem is to keep them on
a narrow subject.)

A popular source, available in most libraries, to keep you current in
public-key cryptography is Byte magazine.

174

You and your correspondent(s) define a cryptosystem. The sender has
an encryption key; the recipient has a decryption key. They are not
identical. The normal message may be called plaintext and the
encrypted form ciphertext.

"Cryptographic keys are analogous to the house and car keys we carry
in our daily lives and serve a similar purpose. In many modern
systems, each key is a string of digits. For example, keys defined by
the Data Encryption Standard of the National Bureau of Standards
consist of 64 binary digits, 56 of which are significant."4

How does it work? "To encrypt a message, a key and the message are
somehow inserted into an encryptor, and the cryptogram that emerges
is a jumble of characters that depends on both the message and the
key. To decrypt the message, the correct key and the cryptogram are
inserted into a decryptor, and the plaintext message emerges."5

This is quite simple with conventional coding. The keys are the same,
must be closely guarded, and you must visit your correspondent to
exchange keys. But using public keys, the problem of meeting and
secrecy is solved.

These keys have remarkable, almost magical properties:

* for each encryption key there is a decryption key, which is not the
  same as the encryption key
* it is feasible to compute a pair of keys, consisting of an
  encryption key and a corresponding decryption key
* it is not feasible to compute the decryption key from knowledge of
  the encryption key."6

You and your correspondent, say, Mary, can counter-economically
contact each other on a "public" bulletin board. Agreeing to exchange
information, you set up your encryption. "To set it up, you generate
a pair of keys, and send the encryption key to Mary by any convenient
means. It need not be kept secret. It can only encrypt messages--not
decrypt them. Revealing it discloses nothing

175

useful about the decryption key. To allow you to send private
messages to her, Mary must similarly create a pair of keys and send
her encryption key to her."7

You may publicize your encryption key with no fear that anyone but
you can decrypt the message. "Any two people with directory entries
could then communicate privately, even if they had no previous
contact."8 Exactly what counter-economists want.

A Touch of Tech and a Knapsack
------------------------------
Before leaving this subject, let us touch briefly on the technology.
One may look up the programming in the cited source and, in a world
of adventurous hackers, no one should find great difficulty in
getting a programmer to set up whatever one needs on one's home
system.

What one requires from Information pyrotechnics and arcane-seeming
codes is a reasonable confidence and qualified respect.
Unfortunately, many whom I have witnessed coming across this field
bounce from awe and feeling that the State is defeated to depression
and resignation when they hear a particular system has been cracked.
Let us try to immunize you against both.

The awe arises from statistics like the one published about the
Rivest-Shamir-Adleman (RSA) cryptosystem. The amount of time required
to crack the code is the factoring time; assuming your key length is
50, it could be factored in 3.9 hours at one computer operation per
microsecond. But doubling the key length to 100 digits kicks up the
factoring time to 74 years and tripling it to 150 digits makes it one
million years to factor! By the time we get to 250 digits, we're
exceeding the estimated lifespan of the universe. Small wonder NSA
wants to standardize key length at 60 to 70 digits.

A 77-digit key was recently available for $165 for the common z80
system.  "message encryption and decryption take about one minute
plus the necessary disk access time. The time needed to generate the
encryption and decryption keys ranges from 15 minutes to 4 hours".
The author of the system, Charles Merritt of PKS, Inc., has received
estimates of the time needed to break the system ranging from three
uninterrupted days on a Cray-1 to one year."9

176

In fact, newer and faster computers than the Cray-1 are up or on the
way, but one can easily outpace them by increasing the number of
digits in the RSA key. Still, one should be aware of the state of the
art when playing this game.

An alternate to the RSA, the Knapsack Scheme, seemed preferable
because of faster encryption and decryption. The name comes from a
mathematical puzzle where if one knows the total weight of a knapsack
and its contents, and the weights of the individual items that may be
in the knapsack, one deduces which items are packed inside. For a
numerical code, the items are a collection of numbers and the
knapsack is their sum.

Martin Hellman of Stanford University and Ralph C. Merkle used the
technique to devise a public-key cryptosystem in 1978. Merkle offered
a reward for anyone who could break the scheme and the game was afoot.

"In 1982, Shamir made the first successful attack in the simplest
form of the knapsack cryptosystem. He found that certain information
about superincreasing sequences is not well disguised by a modular
multiplication trapdoor. In addition, that information could be
secured rapidly by solving a special kind of mathematics problem
(finding a short vector in a lattice). Shamir's method became
practical with the invention of an algorithm for solving this problem
quickly. Soon after, using a similar approach, Adleman broke another
form of the knapsack cryptosystems known as the Graham-Shamir knapsack."10

Shamir collected the $100 prize but Merkle offered another $1000 to
anyone breaking the more complex iterated knapsack. Ernest F.
Brickell of the Sandia National Laboratories in Albuquerque, New
Mexico, went after the prize in the summer of 1984. In October,
"Merkle conceded that Brickell had won the prize and Brickell
received his check". Says Merkle "I think the breaking of iterated
knapsacks is quite surprising and indicates a degree of insecurity
that had not been suspected at all."11

Is it time for information counter-economists to panic? No, and this
is why they need to maintain awareness of the fast-changing field:
"However, this doesn't rule out the possibility that a secure
knapsack cryptosystem exists. Brickell adds,

177

"What this says is that if you use one, you have to use something
other than modular arithmetic for hiding it." Of course,
cryptologists can't resist the challenge of coming up with a
cryptosystem that circumvents the flaws pinpointed by Brickell's
decryption technique. At Crypto '84, Rivest and Benny Cho were ready
with a new knapsack public-key cryptosystem based on arithmetic in
mathematical structures called "finite fields."12

While computer cryptographers play the game of better mouse vs.
better mousetrap, Adi Shamir raises the stakes and offers hope that a
countereconomically invulnerable (within reason) cryptosystem may be
developed--or at least the cost of it can be rationally calculated.

"The most intriguing question is whether you can develop proof
techniques that will show the security of cryptosystems," says
Shamir. "If you could do this, it would be the biggest breakthrough
in cryptography because at last you would be able to show that
concrete cryptosystems just will not be broken in the future unless
there is a certain amount of time."13

As in all Counter-Economics, the risks need to be rationally
calculated and the pay-off traded off against the potential profit.
With computers and countereconomic programs, this can be accomplished
simpler, easier, and faster than ever. Add to this the potential of
inexpensive high security of records and message exchange, and one
need not ask for miraculous invulnerability to the State's authorized
robbers.

But something like that miracle may be provided by the market anyway,
and fairly soon. Having moved information successfully in the
Counter-Economy, the next trick is to move physical objects as safely
and efficiently. Fortunately, as we see in the next chapter, the
market has a very long history in successful shipping
Counter-Economics, that is, Smuggling.

Footnotes
---------
1. But not entirely. In December 1984 the National Security Agency
   announced plans to develop a new-generation system, with greater
   speed and capacity than

178

   existing ones. See the later section on Public Key Cryptography
   for the prime reason why.
2. Reid, B. (1971). The Paper Trip. Fountain Valley, California: Eden
   Press. (A well-known counter-economic text, with updates such as
   The Paper Trip II, 1977, The Paper Trip III, 1998, and [now with
   non-Roman numerals] The Paper Trip 4, 2015.)
3. An irresistible aside. Americans have a clear-cut double standard
   on entrapment which is joy to the Counter-Economist. Entrapping
   businessmen--even big businessmen like John DeLorean--is a no-no;
   yet entrapping politicians (arch-statists), such as those caught
   in FBI's Abscam, is proper. The difference is this: the
   politicians have no legitimate business with any special interest
   group; or, to put it more strongly but still in the American
   tradition, "all politicians are crooks" and assumed to be
   (potentially, at least) up to no good.
4. Smith, J. (1983, January). Public key cryptography. Byte 8(1),
   p. 198.
5. Ibid., p. 199.
6. Ibid., p. 200.
7. Ibid.
8. Rivest, R. L., Shamir, A., & Adleman, L. (1978). A method for
   obtaining digital signatures and public-key cryptosystems.
   Communications of the Association for Computing Machinery 21(2),
   pp. 120-126. doi 10.1145/359340.359342.
9. Smith, op. cit., p. 216 (Editor's Note).
10. Peterson, I. (1984, November 24). The unpacking of a knapsack.
    Science News 126(21), p. 331.
11. Ibid.
12. Ibid.
13. Ibid.

179

Chapters Seven through Ten
--------------------------
These chapters are rumored to exist in digital format somewhere in
the cyberverse. When they are located, they will be added to an
updated version of Counter-Economics. The remainder of
Counter-Economics--Chapters Eleven through Eighteen--was not
completed before SEK3's untimely death. He left an outline of all the
chapters, which is included to demonstrate the breadth, depth,
and social import of the science of Counter-Economics.

180

Outline
-------
(These are Konkin's personal notes describing his vision for CounterEconomics)

Part One

Preface (Optional)
------------------
To be written by "name" writer or writers such as Doug Casey, Harry
Browne, Murray Rothbard, Thomas Szasz, Karl Hess, John Pugsley, and
so on.

Introduction
------------
Written. Summarizes complexity of the theme of the book in simple
terms.  Promises enjoyable survey of this strange, new field with
economic theory in a back section and ideological explanation at the
very end. Up-front about intention but soft-sell and low-key in
presentation.

Chapter One: Tax Counter-Economics
----------------------------------
Written. Very detailed survey of the American "underground economy,"
the taxless part of the whole Counter-Economy. All examples are taken
from wellknown, "Establishment" news sources. Critics of mass tax
evasion quoted and they are very sketchily answered, to tantalize the
readers for later theory.

Chapter Two: International Counter-Economics
--------------------------------------------
Written. First third or so of this chapter hops around the globe,
Western Europe, and the "Third World," with a tax Counter-Economics
approach. Second third covers transitionally Marxist-Leninist Third
World countries and corresponding increase in counter-economic
activity. The final third moves into the "Eastern bloc" and follows
increasing shift of total market to black, underground, or lefthand.
Zero in on the U.S.S.R. do we as the last hope for the State to crush
the Counter- Economy.

Chapter Three: Soviet Counter-Economics
---------------------------------------
Written. This chapter is closest to a single view of the scope and
depth possible in a society that has gone almost completely
Counter-Economic. The helplessness of the Soviet State is stressed
and shown by repeated examples. The possibilities of
Counter-Economics beyond narrow fields of business are introduced to
whet the reader's appetite for the rest of the book. Russian

181

millionaires are exhibited to prove points.

Chapter Four: Drug Counter-Economics
------------------------------------
Written. This chapter is obligatory as "Drug Connections" and the
corresponding network are the most popular view and popular
understanding of black-market activities. Therefore, readers"
expectations will be played against. First, the size and scope of the
market, up to taking over governments when convenient, is shown.
Second, a brief sketch of how the market works from producer to dealer.

Twist: the latter part of this chapter will use the drug market to
show the interconnectedness of nearly everyone in society, complicity
of casual customers, friends, colleagues, relatives, even passersby "
a social conspiracy against the government. This is then compared to
the Prohibition Era for historical continuity and to Laetrile-dealing
to show its expansion outside "vice" drugs. "What's a drug?": who
says and why. The drug business is treated as a counter-economic
paradigm, with similarities and differences to "regular" business.

Chapter Five: Inflation Counter-Economics
-----------------------------------------
Written. Begins with heavy reference to existent doom-and-gloom
writers such as Browne, Casey, Schulz, Pugsley, etc. The Survivalist
Movement is tied in with inflation and its Counter-Economics. Some
theory snuck in here to explain inflation and contrast it with
rising-price phenomenon. The Austrian business cycle is sketched to
give a basis for doom "n" gloom. Gold gets a special section, both
legally and illegally owned and traded, and other precious metals,
commodities, "Alpha Strategy" purchases, right down to retreats and
stashes. The historical gold standard, its return (possibly) and
State's fear of it will lead to the next section. The final section
deals with some innovations in the grey market such as 100%-gold
banking offered by underground "banker" and detailed description of
his activities. The value of counter-economists trading with other
counter-economists is explained here. Modern computers make barter
accounting and underground resource transfer feasible on larger and
larger scale.

Chapter Six: Information Counter-Economics
------------------------------------------
Written. Rapid rise of computer industry, individualistic nature of
freelance consulting, computer privateers and pirates are chronicled.
Government has thrown up its hands at regulation of this industry.
Discussion is then divided into two types of counter-economic
computer and information activities.

182

Counter-Economics for Information Industry
------------------------------------------
Wheeling and dealing, under-the-table trading, and various dodges by
counterecon omists from researchers and consultants to keypunchers
and programmers to owners and franchisers, will be covered.
Mass-media examples will be given for convincing the readers.

Information Industry for Counter-Economics
------------------------------------------
Data encryption and new techniques of libertarian examples. Carl
Nikolai is introduced with his original work in this field. The
applications of state-proof data processing for tax evasion,
inflation-evasion, dealing and other sorts of marketeering are shown,
both those already working and those which are immediate
possibilities.

The Lost Chapters

Chapter Seven: Smuggling Counter-Economics
------------------------------------------
Biggest smugglers may come as a surprise to the readers: nearly
everyone at Customs check-ins; this will open the chapter for reader
identification. Statistics will be given, brightly and spritely as
usual.

Money & Currency Smuggling
--------------------------
This section begins with references to previous six chapters worked
in here; they will remind readers of what they have learned (in a
subtle way). Currency control ties into tax evasion, drug dealing,
and the Red (Communist) black markets, and even information
processing.

Historical Smuggling
--------------------
This will be a historical tour and brief description of the classic,
stereotypical concept of smuggling and its modern hangover is dealt
with, mostly to dispense with it and contrast it to:

Border-Crossing For Profit
--------------------------
This will deal with how most international companies move goods
across borders (or say they do) to beat taxes, tariffs, Value Added
Taxes, Sales Taxes, import quotas, and so on (also done by small
businesses and individuals). Crossing state

183

lines to avoid sales tax and other controls is also covered here.
This section ties in nearly all businesses of every size to the
Counter-Economy.

Contraband Counter-Economics
----------------------------
What is and isn't legal varies widely from State to State (and state
to state and province to province and county to county and). The
concept of entrepreneurship is explored here using "moving goods from
low-price to highprice areas" as starting point for the idea. This is
a subtle introduction of some real economics.

Rhodesian Paper Chase
---------------------
How the oil embargo of Rhodesia was beaten by Mobil Oil:
multinational industry smuggling will be spelled out in adventurous
detail. Example illustrates large-scale end of counter-economic
operations, acceptability among the "higher circles" of finance, and
its potential to shake governments.

What Isn't Smuggling?
---------------------
Trade in violation of regulation could even cover deals between
neighbors, carrying favors for friends, even private mail delivery.
This section emphasizes universality of smuggling. Smuggling Bibles
and religious material is mentioned.  Smuggling "people" is
introduced, to be used in the "Human CounterEconomics" Chapter, with
underground railway of the Civil War period. Tie-in to information
industry (Chapter Six) and transportation problems (Chapter Eight).

Chapter Eight: Transportation Counter-Economics
-----------------------------------------------
The need to move things is basic. Methods will be listed: foot,
private vehicles, commercial transportation, and
government-controlled public means; example of counter-economic use
of all will be given.

Citizen's Band Counter-Economics
--------------------------------
This wild section will tell how CB beats traffic laws and increases
profit for truckers. Actual (simple) economic calculations will be
made. Statistics will be given on the size of the market. Why is
agricultural trucking exempt from most trucking regulation and how is
that used? Lurid examples of counter-economic

184

trucking and how it was romanticized by C&W music, movies and TV, and
radio. Is this a model for spreading other forms and kinds of
Counter-Economics?

The rise of British CB use, completely illegal, is covered.

Moving People Counter-Economically
----------------------------------
New York Gypsy cabs triumph over the regulators. Also covered will be
jitneys; "Grey Rabbit" buses; private car-pools that evolve into
underground busing and taxiing; "hippie" airlines--why it took off
and why it failed; and even hitchhiking.

Ocean Counter-Economics
-----------------------
Small boat owners beat controls in various examples. Potential and
actual usage of boats for counter-economic purposes are also covered,
such as barges of marijuana along the Florida coast. Smuggling is
tied in, of course. A bit of futurism will be added with a discussion
of the Sea-Bed Treaty and countereconomic implications for Ocean-Bed
mining, ranching in the seas, and even ocean habitats.

Air Counter-Economics
---------------------
Freddie Laker takes on regulations and the recent airline
deregulations as examples of responses to airlines" "bending" the
rules--Counter-Economics! There will be examples of plane use for
drug smuggling, diamond smuggling, courier activity, nearly
everything on both private planes and commercial air traffic.

Space Counter-Economics
-----------------------
OTRAG will kick off this chapter, the private space industry both
aboveground and underground; movement in various popular space groups
away from NASA and government monopoly of space. Both actual and
speculative cases will be surveyed.

Chapter Nine: Energy Counter-Economics
--------------------------------------
First, energy sources will be surveyed as to counter-economic and
establishment use: tapping public lines, faking stocks, private
sources kept and exploited.  Survivalists and ecologists are moving
together out of regulated power grid for

185

converging reasons. Both high-tech and low-tech alternatives to the
market will be covered. The sham of government "incentives" for
small-scale energy alternatives and solar will be exposed as actually
protecting monopolistic power companies. This will lead into an
explanation of history of government regulation and its causation of
nearly all current pollution and energy waste. Some speculation will
be added at the end to indicate how a powerful countereconomy (and
weak state) would handle pollution and conservation. This will tiein
with the Justice Counter-Economics chapter.

Chapter Ten: Human Counter-Economics
------------------------------------
This chapter should eliminate any lingering doubts about
Counter-Economics being cold and heartless. Sections will cover
Illegal Aliens, especially Mexican border, but also Asiatics,
Canadians, Australians, and Europeans; labor as a counter- economic
good; Underground Railway slaves moved countereconomically, variants
of it still in use; Refugees covers Counter-Economics of freeing
people from greater tyranny but should they even bother leaving their
existing Counter- Economy? What is a free country (a little more
theory snuck in here)? Minority groups are covered here first, how
they survive in hostile societies, and the sub- societies they form,
usually overwhelmingly countereconomic--a hint of possible
communities for hard-core counter-economists will be introduced here
but developed near the end of the book.

The Unwritten Chapters

Chapter Eleven: Dissenters and Intellectual Counter-Economics
-------------------------------------------------------------
This chapter should grab the academics and the more intellectual
critics. Underground political, religious, and academic activity and
the marketing of that dissent in North America, South America,
Europe, the Third World, and, of course, Eastern Europe, will be
exemplified. Underground newspapers and underground publishing. A
separate section may be developed on education alternatives, the
difference between public schools, private schools, and independent
schools and then out-and-out underground schools will be detailed.
A little more theory can be safely spelled out here.

Chapter Twelve: Sex Counter-Economics
-------------------------------------
"Everybody's doing it" will be the theme here, with statistics on
violation of sex

186

laws; lists of those laws in various states and countries, and
various attitudes will be given, too--nearly everything is illegal
and nearly no one cares.

Pornography
-----------
Definitions vary and these will be noted. Business methods of dealing
with local codes will be spelled out. Classified advertising in
street-sold sex newspapers in Southern California will be cited and
exhibited as a model for other types of counter-economic business
transaction and advertising needs.

Prostitution
------------
"World's oldest profession" is counter-economic: women, men,
adolescents--everyone--and it's admitted by authorities to be
unstoppable everywhere.

Amusing anecdotes about bondage- and dominance-fantasizing
politicians will be told for spice and to make a point. Where does
one draw the line between cohabitation and prostitution will be asked
and answered. Morality and ethics of the business will be discussed
but it will lead into following chapters:

Psychological self-awareness and freedom of expression leads directly
to the next two chapters.

Chapter Thirteen: Feminist Counter-Economics
--------------------------------------------
This will begin with a review of the sex laws of the previous
chapters but with a slant on sexual discrimination and how
counter-economic activity gets around the State.

Home Birth Counter-Economics
----------------------------
The Home Birth Movement, largely illegal in the 1980s, is covered in
some detail--the Midwife as Counter-Economist. History of smuggling
and contraband of birth control information fits in here.

Equality of Counter-Economic Opportunity
----------------------------------------
This can be considered general for all minority groups, but women are
the largest and thus will be focused on: how the Counter-Economy is
sex-blind, color-blind, and creed-blind; the segment further develops
the theme of sub-societies embedded in society-at-large. Aspect which
will be developed is how minorities use the Counter-Economy to break
out of ghettos, barrios, and menial employment in North America and
abroad. Gays will be covered here and in

187

Chapter Twelve. The futility of the ERA and such laws will be shown
and give an opportunity for a little theoretical explanation.

Chapter Fourteen: Justice Counter-Economics
-------------------------------------------
This chapter will, in some senses, tie in with nearly all the other
chapters because it will answer the burning question in the readers'
minds: how can justice and contracts be maintained without
government; in fact, with government as an active enemy of both
contract and justice?

Failure of Government Justice
-----------------------------
Why the government cannot deliver protection or justice leads off
this section.  Lots of examples, mostly in modern-day America, will
be cited. The "climate of fear" and the perennial "crime problem" of
"law and order" as a political football will be exploded.

Protection Business
-------------------
Why catching criminals is too late for most people's good, though the
Counter-Economy will even provide that service. The technology of
protection and defence will be handled in great detail right up to
the latest devices and their market popularity, and even ones yet to
be introduced, right up to science-fiction possibilities.

Natural Law and Its Enforcement
-------------------------------
The concept of Natural Law is introduced. The spontaneous order of
the market will be explained, heavily illustrated both in "straight"
transactions and countereconomic dealings. The stigma of "finking" as
a more general concept and is validity will be developed. Finally,
the reader will be given counter-economic law enforcement and
criminal apprehension procedures. The "protection racket" is
explicitly excluded but "loan sharking" will be dealt with as more
complex and deserving of some sympathy.

Arbitration and Counter-Economics
---------------------------------
Arbitration is already big in the aboveground and cases like the
Johnny Carson NBC contract dispute resolution will be cited, as well
as statistics from the American Arbitration Association. Beginning of
a Libertarian Arbitration

188

Association will be delineated, and tying it in with "blacklists" and
"white lists" will develop a working concept of Counter-Economic
Justice.

Chapter Fifteen: Psychology Counter-Economics
---------------------------------------------
The theme of this chapter is the reinforcement of psychological "good
health", that is, self-reliance and taking responsibility, with
objective actions--which turn out to be counter-economic.

Authoritarianism
----------------
Research on this subject, especially as compiled by Dr. Sharon
Presley, will be presented showing the links between
obedience-conditioning and statism.

Human Potential Movement All the various aspects of the New
Psychology will be shown compatible with counter-economic activity,
and even congruent. Not only Presley, Thomas Szasz, and Nathaniel
Branden, but even psychologists not identified with libertarianism
will be cited.

How It Works
------------
Concrete cases, anonymous, of course, will be summarized here for
illustrating counter-economic psychology.

Mutual Reinforcement
--------------------
Going beyond individual self-reliance and self-acceptance, the
concept of individuals working together counter-economically,
developing trust and honest in- terdependence, will finally be
developed (after popping up briefly all over the book). Beyond
relationships and affinity groups, we come logically to the idea of
an active sub-society and/or Movement of Counter-Economists--and that
brings us to Part II.

Part Two

Chapter Sixteen: Understanding Counter-Economics
------------------------------------------------
"Why am I so smart?" theme kicks off this chapter. "How come the
author understands all this when the rest of society has "caught on"
only in part, at best?" will tease the reader into finally diving
into the theory. Answers: (1) There is a well-worked, proven theory
that has done wonders in predicting human action and describing it in
a scientific manner (this chapter) and (2) There is a strong

189

vested interest--the strongest in all history--to confuse the issue
and distort your information to save its privileges (next chapter).
The value of understanding economics to immunize one from "con games"
will be stressed to pull the reader along.

Praxeology: The Study of Human Action
-------------------------------------
Fairly simple (non-academic) but still rigorous presentation of basic
concepts of Austrian Economics such as subjective value, marginal
utility, time preference (originary rate of interest), regression
(money's origin), the capital pyramid of Eugen Bohm-Bawerk and the
business cycle of Ludwig Von Mises. Both everyday examples for reader
identification and counter-economic examples will be used to maintain
reader interest.

Why Counter-Economics Works
---------------------------
Kicking off with the distinction of profit from "rate of return,"
entrepreneurship is reintroduced and then applied to all aspects of
daily life. (This ties in with the previous chapter--selfreliance,
but now acceptance of risk is stressed.) The key to understanding and
practicing Counter-Economics is now spelled out: trade risk for
profit. The whole experience of the book is linked to back this.

How Counter-Economics Works
---------------------------
A formula will be given, simple algebra, which can be used for
day-to-day business calculations, using readily available data, to
calculate risk taken to see if it is acceptable--maximum estimated
risk, at that! A few caveats about embarking on a counter-economic
lifestyle and disclaimers that the author is "advocating lawbreaking"
closes out this chapter.

Chapter Seventeen: Opposing Counter-Economics
---------------------------------------------
The second answer to why Counter-Economics has not yet become the
Economics is finally given here. The nature of the opposition will be
spelled out.

The Origin and Nature of The State
----------------------------------
History and sociology of the State will be sketched out here, quickly
bringing the reader to the present time with increased awareness.

Establishment Economics Ruling classes--the king and his court
intellectuals--

190

are explained to show why the science of economics is constantly bent
into fraud and con games by political "necessity." The popular myths
of the day will be listed with brief descriptions.

Dead Ends
---------
Conservativism, liberalism, socialism, anarchism, varieties of
libertarianism, pacifism, "dropping out" and retreatism will all be
trotted out, defined, sketched, and refuted as means of achieving a
free society again, drawing heavily on the reader's experience of
the rest of the book to keep it short and sweet--or quick and deadly.
Once all the other options are eliminated, that will leave the final
chapter:

Chapter Eighteen: Social Counter-Economics
------------------------------------------
The promised final chapter spelling out the full integration of
libertarian theory and counter-economic practice is presented. This
section will eventually be expanded to a full volume with a heavier,
academic style and the book will be promised to readers for a
follow-up (a sort of Counter-Economics II for sequel lovers). The
book will end with a veiled--to cover liabilities--exhortation to
live one's theories and fulfill one's dreams. We could close with a
description of the author's ten years in the Counter-Economy to show
he practiced everything he preached (or leave it to a back-panel
biography).

Bibliography & Index
--------------------
Recommended reading for further interest in the various topics. An
index is probably a good idea but would double the time on finishing
the book. The Table of Contents could list sub-topics instead.

NOTE TO PUBLISHERS: The fact that this subject touches almost every
field, and hence will be in demand as a reference in History,
Sociology, Economics, Feminism, Eastern Studies, Russian Studies,
Psychology, and Political Science, and is to date the only such work
available, is not accidental but inherent in the nature of the
subject. Thus, it has the rare quality of being both popular and
academic in appeal, and with a little luck, so will the sequel.
SEK3

191

About Samuel Edward Konkin III
------------------------------
Samuel Edward Konkin III was a vanguard movement theorist and
hard-core activist since the historic split between libertarians and
conservatives at the YAF convention in St. Louis, 1969. In the
subsequent three and a half decades, he served as editor and
publisher of the longest-lived libertarian publication, beginning as
Lais- sez-Faire! (1970), then as New Libertarian Notes (1971-75), New
Libertarian Weekly (1975-77, the longest-running libertarian weekly),
and New Libertarian (1978-1990). He wrote the seminal work on
agorism, New Libertarian Manifesto, in 1980. He has coined the
following terms and concepts, many of which have turned up in all
libertarian publications: Counter-Economics, agorism, minarchy,
partyarchy, anti-principles, Left Libertarianism, anarchozionism,
"Browne-out," red market, Kochtopus, and more. He has influenced the
works of authors such as J. Neil Schulman (Alongside Night) and
Victor Koman (Kings of the High Frontier), who both had their first
professional fiction sales in the pages of his publications. Mr.
Konkin served as Executive Director of the Agorist Institute, an
outreach organization promulgating the principles of agorism and
counter-economics. He was a guest of honor at science-fiction
conventions and libertarian gatherings and was a seasoned world
traveler. Counter-Economics was intended to be his magnum opus, the
distillation of all his work and research over 15 years of movement
activism.  Sadly, of the 18 chapters outlined, only ten chapters were
written. Of those, only six were available at the time of
publication. Mr. Konkin died February 23, 2004.

192

About Derrick Broze
-------------------
Derrick Broze is an author, journalist, documentary filmmaker, and
activist based in Houston, Texas. In 2010, Derrick founded the
activist alliance The Houston Free Thinkers, organizing protests,
music festivals, community gardens, skillshares, and other community
events. In 2011, he began broadcasting his radio show Free Thinker
Radio, which continues to air on 90.1 KPFT in Houston. In 2013, he
founded The Conscious Resistance Network, a site dedicated to
multimedia journalism that exposes corporate and governmental
corruption while highlighting solutions. Derrick has been producing
videos, essays, and articles since 2011. In 2015, he began writing
books and has released one every year since. He co-authored The
Conscious Resistance trilogy with John Vibes and authored The
Holistic Self-Assessment. Derrick started writing and producing
documentaries in 2015. Since 2013, he has spoken in the United
States, Europe, and Central America. His goal is to create a
conscious agora of free humans who desire to be free of force,
coercion, and violence.

193

194